Rental Property Cash Flow & ROI Calculator
Use this real estate investment calculator to analyze the profitability of a rental property. Enter the purchase price, financing details, and operating expenses to instantly see your estimated monthly cash flow, Cash on Cash Return, and Cap Rate.
Purchase & Loan Details
Income & Expenses
Monthly Cash Flow:
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Cash on Cash ROI:
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Cap Rate:
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Monthly Mortgage (P&I):
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Total Monthly Expenses:
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Net Operating Income (NOI) / Mo:
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Total Cash Needed to Close:
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Understanding Rental Property ROI
Investing in real estate is one of the most powerful ways to build wealth, but it relies heavily on the numbers. Unlike stocks, where you buy and hold, real estate requires analyzing Cash Flow, Cap Rate, and Cash on Cash Return to ensure the asset is actually an asset, not a liability.
Key Metrics Defined
- Cash Flow: This is your profit after all expenses are paid. It is calculated as Gross Income – (Mortgage + Taxes + Insurance + Operating Expenses). Positive cash flow is essential for long-term sustainability.
- Cash on Cash Return (CoC): This measures the return on the actual cash you invested (Down Payment + Closing Costs + Rehab). It answers the question: "For every dollar I put into this deal, how much am I getting back this year?" A healthy CoC is typically considered 8-12% or higher.
- Cap Rate (Capitalization Rate): This metric evaluates the profitability of the property irrespective of how it is financed. It is calculated as Net Operating Income (NOI) / Purchase Price. It allows you to compare the raw potential of different properties.
How to Use This Calculator
To get the most accurate results, ensure you are accounting for all potential expenses:
- Purchase Price & Loan: Enter the agreed purchase price and your loan terms. A higher interest rate drastically affects cash flow.
- Expenses: Don't forget "hidden" costs. Vacancy Rate accounts for months the unit sits empty (5% is standard, representing about 18 days a year). Maintenance/HOA should include a budget for future repairs (CapEx).
- Income: Be realistic about rental income. Check comparables (comps) in the area rather than guessing.
Example Scenario
Imagine you buy a property for $200,000 with 20% down ($40,000). Your closing costs are $5,000. Total cash invested is $45,000.
If the house rents for $1,800/month and your total expenses (mortgage, tax, insurance, maintenance) are $1,500/month, your cash flow is $300/month or $3,600/year.
Your Cash on Cash Return would be: $3,600 / $45,000 = 8%. This is a solid, stable return that doesn't even factor in property appreciation or loan paydown!
Why Cash Flow Matters Most
While appreciation (the property increasing in value) is nice, it is speculative. Cash flow is the fuel that keeps your business running. A property with negative cash flow costs you money every month to own, making it risky if the market dips. Always prioritize positive cash flow when analyzing rental deals.