Rental Property ROI Calculator
Analyze your real estate investment instantly. Calculate Cash on Cash Return, Cap Rate, and Monthly Cash Flow to determine if a property is a good deal.
Purchase Information
Loan Details
Income & Expenses
Investment Analysis
Cash on Cash Return
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Monthly Cash Flow
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Cap Rate
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Net Operating Income (Annual)
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Total Cash Needed
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Monthly Mortgage Payment
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Understanding Rental Property ROI
Investing in real estate is one of the most powerful ways to build wealth, but not every property is a good deal. To ensure profitability, investors rely on key metrics like Cash on Cash Return (CoC) and Cap Rate. This calculator helps you break down the expenses and income associated with a potential rental property to visualize the true performance of your capital.
What is Cash on Cash Return?
Cash on Cash Return is widely considered the most important metric for rental property investors. It measures the annual return you make on the actual cash you invested, expressed as a percentage. Unlike Cap Rate, which looks at the property's theoretical return without debt, CoC Return factors in your mortgage financing.
Formula:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
For example, if you invest $50,000 cash (down payment + closing costs) and the property generates $5,000 in positive cash flow per year after all expenses and mortgage payments, your Cash on Cash Return is 10%.
Cap Rate vs. Cash on Cash Return
While both metrics are useful, they serve different purposes:
- Cap Rate (Capitalization Rate): Measures the property's natural rate of return assuming you paid all cash. It helps compare the quality of the property itself against other properties, ignoring financing structure.
- Cash on Cash Return: Measures the return on your specific equity. It helps you understand how hard your money is working for you, factoring in leverage (loans).
How to Estimate Expenses
A common mistake for new investors is underestimating expenses. When using the calculator above, ensure you include:
- Vacancy: Properties won't be rented 365 days a year. A standard safe estimate is 5-8% (about 3 weeks of vacancy per year).
- Maintenance & CapEx: Even if the house is new, things break. Budgeting 10-15% of rent for repairs and capital expenditures (roof, HVAC replacement) is prudent.
- Management Fees: If you hire a property manager, they typically charge 8-10% of the monthly rent.
What is a "Good" ROI?
A "good" return depends on your local market and investment strategy. However, many investors aim for a Cash on Cash return of 8-12%. In highly appreciative markets, investors might accept a lower cash flow return (e.g., 4-6%) banking on the property value increasing over time. In reliable cash-flow markets (often Midwest or South US), investors often seek 10% or higher.