function calculateRentalROI() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var taxYearly = parseFloat(document.getElementById('propertyTax').value);
var insuranceYearly = parseFloat(document.getElementById('insurance').value);
var hoaMonthly = parseFloat(document.getElementById('hoa').value);
var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value);
var maintPercent = parseFloat(document.getElementById('maintenanceRate').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(term) || isNaN(rent)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Loan Calculations
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var monthlyRate = rate / 100 / 12;
var numPayments = term * 12;
var monthlyMortgage = 0;
if (rate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
monthlyMortgage = loanAmount / numPayments;
}
// Expense Calculations
var monthlyTax = taxYearly / 12;
var monthlyInsurance = insuranceYearly / 12;
var vacancyCost = rent * (vacancyPercent / 100);
var maintCost = rent * (maintPercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + hoaMonthly + vacancyCost + maintCost;
var totalExpensesWithMortgage = totalOperatingExpenses + monthlyMortgage;
// ROI Metrics
var monthlyNOI = rent – totalOperatingExpenses;
var monthlyCashFlow = rent – totalExpensesWithMortgage;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = monthlyNOI * 12;
var capRate = (annualNOI / price) * 100;
var cashOnCash = (annualCashFlow / downPayment) * 100;
// Display Results
var resDiv = document.getElementById('results');
resDiv.style.display = 'block';
// Format Currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('resMortgage').innerText = fmt.format(monthlyMortgage);
document.getElementById('resExpenses').innerText = fmt.format(totalExpensesWithMortgage);
document.getElementById('resNOI').innerText = fmt.format(monthlyNOI);
var cfEl = document.getElementById('resCashFlow');
cfEl.innerText = fmt.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfEl.className = "result-val highlight-result";
} else {
cfEl.className = "result-val bad-result";
}
document.getElementById('resCoC').innerText = cashOnCash.toFixed(2) + "%";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
}
Understanding Your Rental Property Investment Metrics
Investing in real estate is a powerful vehicle for building wealth, but success relies heavily on the numbers. Using a Rental Property ROI Calculator is essential for evaluating whether a property will generate positive cash flow or become a financial burden. This tool breaks down the complex costs associated with ownership, going beyond just the mortgage payment to give you a true picture of profitability.
What is Net Operating Income (NOI)?
Net Operating Income is one of the most critical metrics in real estate. It represents the profitability of the property before debt service (mortgage) is deducted. The formula is:
NOI = Gross Rental Income – Operating Expenses
Operating expenses include property taxes, insurance, maintenance, vacancy reserves, and management fees. NOI is crucial because it allows you to compare the profitability of different properties regardless of how they are financed.
Cash Flow vs. Cash on Cash Return
While cash flow tells you how much money lands in your pocket every month, Cash on Cash Return (CoC) tells you how hard your invested money is working. It represents the annual return on the actual capital you invested (down payment + closing costs).
For example, if you invest $50,000 as a down payment and the property generates $5,000 in positive cash flow per year, your Cash on Cash return is 10%. A higher CoC return generally indicates a better investment, allowing you to recoup your initial capital faster.
The Importance of Vacancy and Maintenance Reserves
Novice investors often make the mistake of assuming a property will be rented 12 months a year with nothing breaking. This calculator allows you to input a Vacancy Rate (typically 5-10%) and a Maintenance Rate (typically 5-10%).
Accounting for these "phantom expenses" ensures that when a tenant moves out or a water heater breaks, you have the reserves to cover it without dipping into your personal savings. Accurate estimation of these costs is the difference between a successful rental portfolio and a failed investment.