Rental Property ROI Calculator
Analyze the profitability of your real estate investment with accurate cash flow, Cap Rate, and Cash-on-Cash return metrics.
Purchase & Loan Details
30 Years
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10 Years
Income & Expenses
Investment Analysis
Monthly Cash Flow
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Net Operating Income (Annual)
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Cap Rate
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Cash on Cash Return
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Total Cash Needed to Close
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Monthly Mortgage Payment (P&I)
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Total Monthly Expenses
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Understanding Your Rental Property ROI
Calculating the Return on Investment (ROI) for rental properties involves more than just subtracting your mortgage from the rent. To make smart investment decisions, you need to understand key metrics like Cash Flow, Cap Rate, and Cash-on-Cash return.
Key Metrics Explained:
- Net Operating Income (NOI): This is your total annual revenue minus all necessary operating expenses (taxes, insurance, maintenance, HOA). It excludes mortgage payments. NOI is crucial for determining the raw profitability of the property itself.
- Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price. This percentage helps you compare the profitability of different properties regardless of how they are financed. A higher Cap Rate generally indicates a better return, though often with higher risk.
- Cash on Cash Return: Calculated as Annual Cash Flow / Total Cash Invested. This tells you exactly how hard your actual dollars are working for you. If you put $50,000 down and get $5,000 in positive cash flow per year, your Cash on Cash return is 10%.
Example Scenario
Imagine purchasing a property for $250,000 with 20% down ($50,000). If the property rents for $2,200/month and your total operating expenses (taxes, insurance, maintenance) average $800/month, your NOI is $1,400/month or $16,800 annually.
If your mortgage is $1,000/month, your cash flow is $400/month ($4,800/year). While your Cap Rate might be 6.7%, your Cash on Cash return (based on your $50k down payment plus closing costs) gives you a clear picture of your liquid return.