Rental Property Cash Flow & ROI Calculator
Analyze your investment deals with precision
Purchase Details
Income & Fixed Expenses
Variable Monthly Expenses (%)
Understanding the Rental Property ROI Calculator
Real estate investing is a numbers game. To succeed, you must be able to accurately predict the performance of a property before you buy it. This Rental Property Cash Flow & ROI Calculator is designed to help investors evaluate the profitability of a potential rental property by analyzing income, expenses, and return on investment (ROI).
Key Metrics Explained
1. Cash on Cash ROI
Cash on Cash Return is perhaps the most important metric for rental investors. It measures the annual return you make on the cash you actually invested (Down Payment + Closing Costs + Rehab). Unlike Cap Rate, it takes debt service (mortgage) into account.
Formula: (Annual Cash Flow / Total Cash Invested) × 100
A "good" Cash on Cash return varies by market, but many investors aim for 8-12% or higher.
2. Cap Rate (Capitalization Rate)
Cap Rate measures a property's natural rate of return assuming you paid all cash. It allows you to compare properties regardless of financing. It is calculated using Net Operating Income (NOI) divided by the purchase price.
3. Net Operating Income (NOI)
NOI is the total income the property generates minus all operating expenses (Taxes, Insurance, Repairs, Vacancy, Management) but excluding mortgage payments. It represents the profitability of the asset itself.
Why Include "Phantom" Expenses?
Many new investors make the mistake of calculating cash flow as simply Rent – Mortgage – Taxes – Insurance. However, this calculator includes inputs for:
- Vacancy (5-8%): Months where the property sits empty.
- Repairs (5%): Minor fixes like leaky faucets or broken switches.
- CapEx (5-10%): Major capital expenditures like a new roof or HVAC system.
- Property Management (8-10%): The cost of hiring a professional manager. Even if you self-manage, you should account for this "cost" of your time.
By factoring in these costs, you ensure your investment remains profitable even when things go wrong.
How to Use This Calculator
- Purchase Details: Enter the asking price and your loan terms. Don't forget closing costs!
- Income: Input the expected monthly rent. Check local comps (comparables) to be accurate.
- Expenses: Be honest about taxes and insurance. Adjust the variable expense percentages based on the age and condition of the property.
- Analyze: Click "Calculate Results" to see if the property generates positive cash flow.