Please enter valid positive numbers for all fields.
Total Initial Investment (Cash Needed):0
Monthly Mortgage Payment:0
Monthly Operating Expenses + Vacancy:0
Monthly Cash Flow:0
Cash on Cash ROI
0%
Annual Cash Flow
0
Understanding Rental Property Cash Flow and ROI
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee profit. To succeed, investors must analyze the numbers rigorously. This Rental Property ROI Calculator helps you determine the viability of a potential investment by analyzing cash flow and Cash on Cash Return.
Why Cash Flow is King
Cash flow is the net income from a real estate investment after mortgage payments and operating expenses have been made. Positive cash flow ensures that the property pays for itself and provides passive income. Negative cash flow means you are losing money every month just to hold the asset.
Formula for Monthly Cash Flow:
Gross Rent – (Mortgage Payment + Taxes + Insurance + HOA + Maintenance + Vacancy Reserves)
What is Cash on Cash Return?
Cash on Cash (CoC) Return is a metric usually expressed as a percentage that measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year. It is arguably the most important metric for buy-and-hold investors because it calculates the return on the actual cash you invested, not the total loan amount.
How We Calculate ROI in This Tool
Our calculator uses the following logic to derive your Cash on Cash return:
Total Cash Invested: This includes your Down Payment + Closing Costs.
Annual Net Cash Flow: (Monthly Rental Income – Monthly Expenses – Mortgage Payment) × 12.
CoC ROI: (Annual Net Cash Flow / Total Cash Invested) × 100.
Realistic Inputs for Accurate Results
To get the most out of this calculator, ensure your inputs are realistic:
Vacancy Rate: Always account for vacancy. A standard assumption is 5% to 8%, representing about 2-4 weeks of vacancy per year.
Operating Expenses: Don't underestimate maintenance. Setting aside 10-15% of rent for repairs and CapEx (capital expenditures) is a prudent strategy.
Interest Rates: Check current market rates for investment properties, which are typically 0.5% to 1% higher than primary residence rates.
Interpreting Your Results
What is a "good" Cash on Cash return? This varies by investor and market, but generally:
8-12%: Considered a solid return in many stable markets.
15%+: Excellent return, often found in riskier or lower-cost markets.
Below 5%: Might be acceptable if the property has high appreciation potential, but cash flow is tight.
Use the calculator above to adjust your offer price or down payment strategy to hit your target ROI numbers.
function calculateRentalProperty() {
// Clear previous error states
document.getElementById('error-message').style.display = 'none';
// Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var downPaymentPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseFloat(document.getElementById('loanTerm').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
// Validation: Check if inputs are numbers and non-negative
if (isNaN(price) || isNaN(rent) || isNaN(downPaymentPercent) ||
isNaN(interestRate) || isNaN(loanTermYears) || isNaN(monthlyExpenses) ||
price <= 0 || loanTermYears 0) {
cocRoi = (annualCashFlow / totalCashInvested) * 100;
}
// Display Results
// Use currency formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
document.getElementById('res-initial-investment').innerHTML = formatter.format(totalCashInvested);
document.getElementById('res-mortgage').innerHTML = formatter.format(monthlyMortgage);
// Combine Op Expenses + Vacancy for display clarity
document.getElementById('res-expenses').innerHTML = formatter.format(monthlyExpenses + vacancyCost);
var cashFlowElement = document.getElementById('res-cashflow');
cashFlowElement.innerHTML = formatter.format(monthlyCashFlow);
cashFlowElement.style.color = monthlyCashFlow >= 0 ? '#27ae60' : '#c0392b';
document.getElementById('res-annual-cf').innerHTML = formatter.format(annualCashFlow);
var roiElement = document.getElementById('res-coc');
roiElement.innerHTML = cocRoi.toFixed(2) + '%';
roiElement.style.color = cocRoi >= 0 ? '#2980b9' : '#c0392b';
// Show result area
document.getElementById('results-area').style.display = 'block';
}