Analyze your real estate investment potential with precision.
Monthly Mortgage Payment:$0.00
Monthly Cash Flow:$0.00
Annual Net Operating Income (NOI):$0.00
Capitalization Rate (Cap Rate):0.00%
Cash-on-Cash Return:0.00%
Understanding Rental Property ROI
Return on Investment (ROI) is the most critical metric for any real estate investor. It measures how much profit you generate on your investment property relative to its cost. A high ROI indicates that the investment's gains compare favorably to its cost.
Key Metrics Explained
Cap Rate: Calculated by dividing the Net Operating Income (NOI) by the purchase price. It ignores financing and focuses on the property's natural yield.
Cash-on-Cash Return: This measures the annual cash flow relative to the actual amount of cash invested (down payment and closing costs). It is often considered more relevant for financed properties.
Net Operating Income (NOI): Your total annual income minus all operating expenses (excluding mortgage payments).
Example ROI Calculation
Metric
Value
Property Price
$250,000
Down Payment (20%)
$50,000
Monthly Rent
$2,200
Operating Expenses
$500/mo
Annual Cash Flow
$6,400 (Estimated)
How to Increase Your Rental ROI
To maximize your returns, focus on two levers: increasing income and decreasing expenses. Strategies include regular market rent reviews, implementing RUBS (Ratio Utility Billing Systems) for utilities, and performing preventative maintenance to avoid costly emergency repairs.
function calculateRentalROI() {
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value) / 100 / 12;
var term = parseFloat(document.getElementById('loanTerm').value) * 12;
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
if (isNaN(price) || isNaN(downPercent) || isNaN(rent)) {
alert("Please enter valid numerical values.");
return;
}
// Mortgage Calculation
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var mortgage = 0;
if (rate > 0) {
mortgage = (loanAmount * rate * Math.pow(1 + rate, term)) / (Math.pow(1 + rate, term) – 1);
} else {
mortgage = loanAmount / term;
}
// Calculations
var monthlyCashFlow = rent – mortgage – expenses;
var annualCashFlow = monthlyCashFlow * 12;
var noiAnnual = (rent – expenses) * 12;
var capRate = (noiAnnual / price) * 100;
var cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
// Display results
document.getElementById('resMortgage').innerHTML = "$" + mortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCashFlow').innerHTML = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resNOI').innerHTML = "$" + noiAnnual.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
document.getElementById('resCashOnCash').innerHTML = cashOnCash.toFixed(2) + "%";
// Show the results box
document.getElementById('roiResults').style.display = 'block';
// SEO highlight for negative cash flow
if (monthlyCashFlow < 0) {
document.getElementById('resCashFlow').style.color = "#d9534f";
} else {
document.getElementById('resCashFlow').style.color = "#5cb85c";
}
}