Rental Property ROI Calculator
Analyze cash flow, cap rate, and cash-on-cash return for your real estate investment.
Investment Analysis
Monthly Cash Flow:
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Cash on Cash Return (ROI):
0.00%
Cap Rate:
0.00%
Total Monthly Income:
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Monthly Mortgage Payment:
$0.00
Total Monthly Expenses (Non-Mortgage):
$0.00
Net Operating Income (Annual):
$0.00
Total Cash Invested (Upfront):
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Understanding Rental Property ROI
Investing in real estate is a powerful way to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must analyze the numbers accurately. This Rental Property ROI Calculator helps you determine the viability of a potential investment by breaking down cash flow, Cash-on-Cash Return, and Cap Rate.
Key Metrics Explained
- Cash Flow: This is your net profit per month after all expenses (mortgage, taxes, insurance, repairs) are paid. Positive cash flow is essential for a sustainable investment.
- Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment + closing costs). It gives you a true picture of how hard your money is working compared to other investment vehicles like stocks.
- Cap Rate (Capitalization Rate): This calculates the rate of return on the property based on the income the property is expected to generate, regardless of financing. It is calculated as Net Operating Income / Property Value.
How to Calculate Cash on Cash Return
The formula for Cash on Cash return is:
CoC ROI = (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 net cash flow per year, your Cash on Cash return is 10%. This calculator handles this complex math for you, factoring in vacancy rates and maintenance reserves to give a realistic projection.
Why Net Operating Income (NOI) Matters
NOI is the total income the property generates minus all operating expenses, but excluding mortgage payments. It is a critical figure used by lenders and appraisers to determine the value of income-producing properties. A higher NOI generally indicates a more profitable property.
Tips for Maximizing Rental Yields
To improve your ROI, consider minimizing vacancy periods, increasing rent incrementally to match market rates, and keeping maintenance costs low through preventative inspections. Always ensure your "Maintenance/Vacancy" buffer in the calculator is realistic (typically 5-10%) to avoid surprises.