Scotiabank Mortgage Rates Calculator

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Rental Property ROI & Cash Flow Calculator

Results Summary

Monthly Mortgage:

$0.00

Monthly Cash Flow:

$0.00

Cap Rate:

0.00%

Cash on Cash ROI:

0.00%

function calculateRentalROI() { var price = parseFloat(document.getElementById('purchasePrice').value) || 0; var downPaymentPct = parseFloat(document.getElementById('downPaymentPercent').value) || 0; var interestRate = parseFloat(document.getElementById('interestRate').value) || 0; var term = parseFloat(document.getElementById('loanTerm').value) || 0; var rent = parseFloat(document.getElementById('monthlyRent').value) || 0; var taxes = parseFloat(document.getElementById('annualTaxes').value) || 0; var insurance = parseFloat(document.getElementById('annualInsurance').value) || 0; var maintenancePct = parseFloat(document.getElementById('maintenancePercent').value) || 0; if (price <= 0 || rent 0) { monthlyMortgage = loanAmount * (monthlyInterest * Math.pow(1 + monthlyInterest, totalPayments)) / (Math.pow(1 + monthlyInterest, totalPayments) – 1); } else { monthlyMortgage = loanAmount / totalPayments; } // Expenses var monthlyTaxes = taxes / 12; var monthlyInsurance = insurance / 12; var monthlyMaintenance = rent * (maintenancePct / 100); var totalMonthlyExpenses = monthlyMortgage + monthlyTaxes + monthlyInsurance + monthlyMaintenance; // Metrics var monthlyCashFlow = rent – totalMonthlyExpenses; var annualCashFlow = monthlyCashFlow * 12; // Cash on Cash ROI = Annual Cash Flow / Initial Investment // Assuming initial investment is just the down payment for this simple model var cocROI = (annualCashFlow / downPaymentAmount) * 100; // Cap Rate = NOI / Purchase Price var annualNOI = (rent – monthlyTaxes – monthlyInsurance – monthlyMaintenance) * 12; var capRate = (annualNOI / price) * 100; // Display Results document.getElementById('resMortgage').innerText = '$' + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCashFlow').innerText = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCapRate').innerText = capRate.toFixed(2) + '%'; document.getElementById('resROI').innerText = cocROI.toFixed(2) + '%'; document.getElementById('roi-results').style.display = 'block'; if (monthlyCashFlow < 0) { document.getElementById('resCashFlow').style.color = '#c53030'; } else { document.getElementById('resCashFlow').style.color = '#2f855a'; } }

Understanding Rental Property ROI and Profitability

Investing in real estate is one of the most proven ways to build long-term wealth, but not every property is a "good" deal. To succeed as a landlord or real estate investor, you must look past the aesthetics of a building and analyze the numbers. This Rental Property ROI Calculator helps you determine if a potential investment will put money in your pocket or drain your bank account.

Key Metrics for Real Estate Investors

When evaluating a rental property, there are three primary numbers you need to watch:

  • Cash Flow: This is the net amount of money moving in and out of your business monthly. Positive cash flow means the rent covers all expenses (mortgage, taxes, insurance, maintenance) with money left over.
  • Cap Rate (Capitalization Rate): This represents the property's natural rate of return without considering financing. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. It allows you to compare different properties side-by-side regardless of the mortgage terms.
  • Cash on Cash Return (ROI): This is often considered the most important metric for leveraged investors. It measures the annual cash flow relative to the actual cash you invested (your down payment).

How to Use the Rental ROI Calculator

To get an accurate calculation, you need to be realistic with your inputs:

  1. Purchase Price: The total price you are paying for the property.
  2. Down Payment: Most investment loans require 20% to 25% down. A higher down payment reduces your monthly mortgage but increases your initial "cash out," which affects your ROI.
  3. Maintenance and Repairs: Beginners often overlook this. A safe rule of thumb is setting aside 10% of the rent for ongoing repairs and future capital expenditures (like a new roof).
  4. Fixed Costs: Ensure you include accurate property tax and insurance figures, as these vary significantly by ZIP code.

Example ROI Calculation

Imagine you buy a duplex for $300,000 with 20% down ($60,000). Your mortgage, taxes, and insurance come to $1,800 per month. You rent both sides for a total of $2,800. After setting aside $280 (10%) for maintenance, your total monthly expenses are $2,080.

Your Monthly Cash Flow is $720 ($2,800 – $2,080). Annually, that is $8,640. To find your Cash on Cash ROI, you divide your annual profit ($8,640) by your initial investment ($60,000), resulting in a 14.4% ROI. This would generally be considered an excellent investment in most markets.

Pro Tip: The 1% Rule

Many investors use the "1% Rule" as a quick filter. If the monthly rent is at least 1% of the purchase price (e.g., a $200,000 house renting for $2,000), it is likely to have a strong positive cash flow. While harder to find in today's market, it remains a gold standard for high-yield rental investing.

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