function calculateRentalROI() {
// 1. Get Input Values
var price = parseFloat(document.getElementById("rrc-price").value) || 0;
var closing = parseFloat(document.getElementById("rrc-closing").value) || 0;
var down = parseFloat(document.getElementById("rrc-down").value) || 0;
var rate = parseFloat(document.getElementById("rrc-rate").value) || 0;
var term = parseFloat(document.getElementById("rrc-term").value) || 0;
var rent = parseFloat(document.getElementById("rrc-rent").value) || 0;
var hoa = parseFloat(document.getElementById("rrc-hoa").value) || 0;
var tax = parseFloat(document.getElementById("rrc-tax").value) || 0;
var insurance = parseFloat(document.getElementById("rrc-insurance").value) || 0;
// Validation for critical inputs
if (price <= 0 || term 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
// Monthly Expenses Breakdown
var monthlyTax = tax / 12;
var monthlyInsurance = insurance / 12;
var totalMonthlyExpenses = monthlyMortgage + hoa + monthlyTax + monthlyInsurance;
// Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// NOI (Net Operating Income) = Income – Operating Expenses (Excluding Mortgage)
// Operating Expenses = HOA + Tax + Insurance
var annualOperatingExpenses = (hoa * 12) + tax + insurance;
var annualNOI = (rent * 12) – annualOperatingExpenses;
// Cap Rate = (NOI / Purchase Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
var totalCashInvested = down + closing;
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
// 3. Display Results
var resultDiv = document.getElementById("rrc-results");
resultDiv.style.display = "block";
// Helper for formatting currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById("rrc-result-cashflow").innerText = fmt.format(monthlyCashFlow);
document.getElementById("rrc-result-cashflow").className = "rrc-result-value " + (monthlyCashFlow >= 0 ? "rrc-highlight" : "rrc-negative");
document.getElementById("rrc-result-coc").innerText = cashOnCash.toFixed(2) + "%";
document.getElementById("rrc-result-coc").className = "rrc-result-value " + (cashOnCash >= 0 ? "rrc-highlight" : "rrc-negative");
document.getElementById("rrc-result-cap").innerText = capRate.toFixed(2) + "%";
document.getElementById("rrc-result-noi").innerText = fmt.format(annualNOI);
document.getElementById("rrc-result-investment").innerText = fmt.format(totalCashInvested);
document.getElementById("rrc-result-mortgage").innerText = fmt.format(monthlyMortgage);
document.getElementById("rrc-result-expenses").innerText = fmt.format(totalMonthlyExpenses);
}
Understanding Your Rental Property ROI
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To succeed, investors must meticulously analyze the numbers. This Rental Property Cash Flow & ROI Calculator helps you evaluate the potential profitability of a residential investment property by calculating key metrics like Cash Flow, Cap Rate, and Cash-on-Cash Return.
What is Monthly Cash Flow?
Cash flow is the net amount of money moving in or out of your investment each month. It is calculated by subtracting your total monthly expenses (mortgage, taxes, insurance, HOA fees) from your total monthly rental income. Positive cash flow means the property pays for itself and generates profit, while negative cash flow means you are paying out of pocket to hold the asset.
Key Metrics Explained
Cash-on-Cash Return (CoC): This measures the annual return on the actual cash you invested (Down Payment + Closing Costs). It gives you a realistic view of how hard your money is working compared to other investment vehicles like the stock market. A good CoC return is often considered to be between 8% and 12%, though this varies by market.
Cap Rate (Capitalization Rate): This metric indicates the rate of return on a real estate investment property based on the income that the property is expected to generate. It is calculated by dividing the Net Operating Income (NOI) by the property asset value. Cap rates are useful for comparing different properties without factoring in mortgage financing.
Net Operating Income (NOI): This is the total income the property generates minus all necessary operating expenses. Importantly, NOI excludes debt service (mortgage payments) and income taxes.
How to Use This Calculator
To get the most accurate results, ensure you have precise estimates for all expenses:
Purchase Info: Enter the agreed purchase price and any estimated closing costs.
Loan Details: Input your down payment amount, interest rate, and loan term (usually 30 years).
Income & Expenses: Be realistic about rental income. Don't forget to include annualized costs for property taxes and insurance, as well as monthly HOA fees if applicable.
By adjusting these variables, you can determine the maximum price you should pay for a property to meet your investment goals.