Rental Property ROI Calculator
Est. Monthly Mortgage (P&I):
$0.00
Total Monthly Expenses:
$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Cash on Cash ROI:
0.00%
How to Calculate Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good deal. To ensure your investment is profitable, you must calculate the Cash Flow and Cash on Cash Return (ROI). This calculator helps investors determine if a specific property will generate positive income after all expenses are paid.
Key Metrics Explained
- Monthly Cash Flow: This is the net income left in your pocket after paying the mortgage, taxes, insurance, and operating costs. A positive cash flow indicates a profitable asset.
- Cash on Cash ROI: This metric measures the annual return on the actual cash you invested (down payment + closing costs). It gives a clearer picture of performance than simple appreciation.
- Operating Expenses: These include property taxes, landlord insurance, HOA fees, vacancy reserves, and maintenance costs. Underestimating these is a common mistake for new investors.
Understanding the 1% Rule in Real Estate
A quick "rule of thumb" often used by investors is the 1% Rule. This rule suggests that for a property to cash flow efficiently, the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month.
While this calculator provides a detailed analysis based on your specific inputs (interest rate, specific expenses), keeping the 1% rule in mind can help you quickly filter potential properties before diving into the detailed math.
Why Cash on Cash Return Matters
Unlike the Cap Rate, which looks at the property's performance without considering financing, the Cash on Cash Return considers your debt service (mortgage). This is crucial because most investors use leverage (loans) to buy real estate. A good Cash on Cash return varies by market, but many investors aim for 8-12%.