Rental Property Cash Flow & ROI Calculator
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Rental Property ROI Calculator
Net Operating Income (MO)
$0.00
Understanding Rental Property Analysis
Investing in real estate is a numbers game. To succeed as a landlord, you must look past the aesthetics of a property and drill down into the financial metrics that determine profitability. This Rental Property Cash Flow & ROI Calculator is designed to help investors evaluate the potential return of a residential investment property accurately.
Key Metrics Explained
When analyzing a deal, experienced investors focus on three primary indicators:
- Cash Flow: This is your profit after all expenses, including the mortgage, have been paid. Positive cash flow ensures the property pays for itself and provides passive income. It is calculated as: Gross Rent – (Operating Expenses + Mortgage Payment).
- Cash on Cash ROI: This metric measures the annual return on the actual cash you invested (down payment + closing costs), rather than the total price of the home. It gives you a clear picture of how hard your money is working compared to other investment vehicles like stocks.
- Cap Rate (Capitalization Rate): The Cap Rate measures the natural rate of return of the property assuming you bought it with cash. It is useful for comparing the profitability of different properties irrespective of financing.
Estimating Expenses Correctly
One of the biggest mistakes new investors make is underestimating operating expenses. Beyond the mortgage, tax, and insurance, you must account for:
- Vacancy: Rental properties won't be occupied 100% of the time. A standard safety margin is 5-8%, which equates to about 2-3 weeks of vacancy per year.
- Maintenance: Things break. Setting aside 5-10% of the monthly rent for repairs ensures you have funds ready for leaky faucets or HVAC issues without disrupting your cash flow.
- HOA Fees: If the property is in a managed community, Homeowner Association fees can significantly eat into your profits and are usually non-negotiable.
How to Use This Calculator
Enter the purchase details and loan terms to determine your fixed mortgage costs. Then, input your estimated rental income and variable expenses. The calculator will break down your monthly financial performance, showing you exactly how much cash enters your pocket every month and your overall return on investment.
function calculateRentalROI() {
// 1. Retrieve and Parse Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var down = parseFloat(document.getElementById('downPayment').value) || 0;
var rate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var tax = parseFloat(document.getElementById('propertyTax').value) || 0;
var insurance = parseFloat(document.getElementById('insurance').value) || 0;
var hoa = parseFloat(document.getElementById('hoaFee').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('vacancy').value) || 0;
// 2. Calculate Mortgage Payment
var principal = price – down;
var monthlyRate = rate / 100 / 12;
var numberOfPayments = years * 12;
var mortgagePayment = 0;
if (rate > 0 && years > 0) {
// Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var x = Math.pow(1 + monthlyRate, numberOfPayments);
mortgagePayment = principal * ((monthlyRate * x) / (x – 1));
} else if (years > 0 && rate === 0) {
mortgagePayment = principal / numberOfPayments;
}
// 3. Calculate Monthly Operating Expenses
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var monthlyMaint = rent * (maintPercent / 100);
var monthlyVacancy = rent * (vacancyPercent / 100);
var totalMonthlyExpenses = monthlyTax + monthlyIns + hoa + monthlyMaint + monthlyVacancy;
// 4. Calculate Metrics
var noi = rent – totalMonthlyExpenses; // Net Operating Income (Monthly)
var monthlyCashFlowVal = noi – mortgagePayment;
var annualCashFlow = monthlyCashFlowVal * 12;
var totalCashInvested = down + closing;
var cocRoi = 0;
if (totalCashInvested > 0) {
cocRoi = (annualCashFlow / totalCashInvested) * 100;
}
var capRateVal = 0;
if (price > 0) {
capRateVal = ((noi * 12) / price) * 100;
}
// 5. Display Results
var resultDiv = document.getElementById('results');
resultDiv.style.display = "block";
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('monthlyCashFlow').innerText = formatter.format(monthlyCashFlowVal);
document.getElementById('cashOnCash').innerText = cocRoi.toFixed(2) + "%";
document.getElementById('capRate').innerText = capRateVal.toFixed(2) + "%";
document.getElementById('monthlyMortgage').innerText = formatter.format(mortgagePayment);
document.getElementById('totalExpenses').innerText = formatter.format(totalMonthlyExpenses);
document.getElementById('noi').innerText = formatter.format(noi);
// Styling logic for positive/negative cash flow
var cfElement = document.getElementById('monthlyCashFlow');
if (monthlyCashFlowVal >= 0) {
cfElement.classList.remove('negative');
cfElement.classList.add('positive');
} else {
cfElement.classList.remove('positive');
cfElement.classList.add('negative');
}
}