*Calculations are estimates. Consult a financial advisor.
function calculateROI() {
// Get Inputs
var price = parseFloat(document.getElementById('propPrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var intRate = parseFloat(document.getElementById('intRate').value) || 0;
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 30;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var annualTax = parseFloat(document.getElementById('annualTax').value) || 0;
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value) || 0;
var monthlyMaintenance = parseFloat(document.getElementById('maintenance').value) || 0;
// 1. Calculate Mortgage
var loanAmount = price – downPayment;
var monthlyRate = (intRate / 100) / 12;
var totalPayments = loanTerm * 12;
var monthlyPI = 0;
if (loanAmount > 0) {
if (intRate === 0) {
monthlyPI = loanAmount / totalPayments;
} else {
monthlyPI = (loanAmount * monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
}
}
// 2. Calculate Income
var grossAnnualRent = monthlyRent * 12;
var vacancyLoss = grossAnnualRent * (vacancyRate / 100);
var effectiveGrossIncome = grossAnnualRent – vacancyLoss;
// 3. Calculate Expenses
var annualMaintenance = monthlyMaintenance * 12;
var totalOperatingExpenses = annualTax + annualInsurance + annualMaintenance;
// 4. Calculate NOI (Net Operating Income)
var noi = effectiveGrossIncome – totalOperatingExpenses;
// 5. Calculate Cash Flow
var annualDebtService = monthlyPI * 12;
var annualCashFlow = noi – annualDebtService;
var monthlyCashFlow = annualCashFlow / 12;
// 6. Calculate Returns
var totalInvestment = downPayment + closingCosts;
var cocReturn = 0;
if (totalInvestment > 0) {
cocReturn = (annualCashFlow / totalInvestment) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (noi / price) * 100;
}
// Display Results
document.getElementById('resultsArea').style.display = 'block';
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
document.getElementById('resCashFlow').innerHTML = formatter.format(monthlyCashFlow);
document.getElementById('resNOI').innerHTML = formatter.format(noi);
// Format Percentages
document.getElementById('resCoC').innerHTML = cocReturn.toFixed(2) + '%';
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%';
// Color coding for cash flow
if(monthlyCashFlow >= 0) {
document.getElementById('resCashFlow').style.color = '#27ae60';
} else {
document.getElementById('resCashFlow').style.color = '#c0392b';
}
}
Understanding Rental Property ROI: A Complete Guide
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 rely on concrete data rather than gut feelings. This Rental Property ROI Calculator helps you analyze the profitability of a potential investment by breaking down the three most critical metrics: Cash Flow, Cash on Cash Return, and Cap Rate.
Key Metrics Explained
1. Net Operating Income (NOI)
NOI is the foundation of real estate analysis. It represents the total income the property generates minus all necessary operating expenses. Note that NOI excludes mortgage payments. It measures the property's ability to generate revenue purely from operations.
Formula: NOI = (Rental Income – Vacancy Losses) – (Taxes + Insurance + Maintenance + Management Fees)
2. Cash Flow
Cash flow is the net amount of cash moving into or out of your pocket after all expenses, including the mortgage. Positive cash flow means the property pays for itself and generates profit. Negative cash flow means you are losing money every month to hold the asset.
3. Cap Rate (Capitalization Rate)
The Cap Rate measures the natural rate of return of the property assuming you paid all cash (no loan). It allows you to compare the profitability of different properties regardless of how they are financed. A higher cap rate generally implies higher risk or higher return potential.
4. Cash on Cash Return (CoC)
This is arguably the most important metric for leveraged investors. It calculates the annual return on the actual cash you invested (down payment + closing costs). It answers the question: "For every dollar I put in, how much am I getting back this year?"
How to Use This Calculator
Property Price & Loan: Enter the purchase price and your financing details. The calculator assumes a standard amortizing loan.
Vacancy Rate: No property is occupied 100% of the time. A standard conservative estimate is 5% to 8% depending on the market.
Maintenance: Always budget for repairs. A common rule of thumb is to set aside 10-15% of the monthly rent or a fixed dollar amount per month.
Using this tool allows you to perform a "deal check" in seconds. If the Cash on Cash return is lower than inflation or safe stock market returns (e.g., under 6-8%), the property may not be a viable investment unless you are banking purely on appreciation.
{
"@context": "https://schema.org",
"@type": "FAQPage",
"mainEntity": [{
"@type": "Question",
"name": "What is a good Cash on Cash return for rental property?",
"acceptedAnswer": {
"@type": "Answer",
"text": "While it varies by market and investor strategy, a Cash on Cash return of 8% to 12% is generally considered solid for rental properties. Some aggressive investors look for 15%+, while those in high-appreciation markets might accept 4-6%."
}
}, {
"@type": "Question",
"name": "How is Cap Rate calculated?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Cap Rate is calculated by dividing the Net Operating Income (NOI) by the current market value or purchase price of the property. Formula: Cap Rate = NOI / Purchase Price."
}
}, {
"@type": "Question",
"name": "Does the calculator include mortgage principal paydown?",
"acceptedAnswer": {
"@type": "Answer",
"text": "The Cash Flow calculation looks at liquid cash remaining after debt service. However, mortgage principal paydown is an equity benefit that increases your total Return on Investment (ROI) over time, though it is not spendable cash."
}
}]
}