Please enter valid positive numbers for all required fields.
Investment Analysis
Initial Cash Invested:$0.00
Monthly Mortgage Payment:$0.00
Monthly Cash Flow:$0.00
Annual Net Operating Income (NOI):$0.00
Cap Rate:0.00%
Cash on Cash Return:0.00%
function calculateRentalROI() {
// 1. Get DOM elements
var purchasePriceInput = document.getElementById('purchasePrice');
var closingCostsInput = document.getElementById('closingCosts');
var downPaymentPercentInput = document.getElementById('downPaymentPercent');
var interestRateInput = document.getElementById('interestRate');
var loanTermInput = document.getElementById('loanTerm');
var monthlyRentInput = document.getElementById('monthlyRent');
var monthlyExpensesInput = document.getElementById('monthlyExpenses');
var errorDiv = document.getElementById('roiError');
var resultsDiv = document.getElementById('roiResults');
// 2. Parse values
var price = parseFloat(purchasePriceInput.value);
var closing = parseFloat(closingCostsInput.value) || 0;
var downPercent = parseFloat(downPaymentPercentInput.value);
var rate = parseFloat(interestRateInput.value);
var termYears = parseFloat(loanTermInput.value);
var rent = parseFloat(monthlyRentInput.value);
var expenses = parseFloat(monthlyExpensesInput.value);
// 3. Validate Inputs
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(termYears) || isNaN(rent) || isNaN(expenses) || price 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
monthlyMortgage = loanAmount / totalPayments;
}
// Cash Flow Calculations
var totalMonthlyOutflow = monthlyMortgage + expenses;
var monthlyCashFlow = rent – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI)
// NOI = Annual Income – Annual Operating Expenses (Excluding Financing/Mortgage)
var annualIncome = rent * 12;
var annualOperatingExpenses = expenses * 12;
var noi = annualIncome – annualOperatingExpenses;
// Metrics
var capRate = (noi / price) * 100;
var cashOnCash = (annualCashFlow / initialCashInvested) * 100;
// 5. Update DOM
document.getElementById('resInitialCash').innerHTML = '$' + initialCashInvested.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMortgage').innerHTML = '$' + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('resMonthlyCashFlow');
cfElement.innerHTML = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
cfElement.style.color = monthlyCashFlow >= 0 ? '#27ae60' : '#c0392b';
document.getElementById('resNOI').innerHTML = '$' + noi.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%';
var cocElement = document.getElementById('resCoC');
cocElement.innerHTML = cashOnCash.toFixed(2) + '%';
cocElement.style.color = cashOnCash >= 0 ? '#27ae60' : '#c0392b';
resultsDiv.style.display = 'block';
}
Understanding Rental Property ROI
Investing in real estate is one of the most popular ways to build wealth, but not every property is a good deal. To ensure your investment will yield a profit, you must accurately calculate the Return on Investment (ROI). This Rental Property ROI Calculator helps investors analyze the profitability of a potential real estate purchase by breaking down cash flow, Cap Rate, and Cash on Cash Return.
Key Metrics Explained
1. Cash Flow
Cash flow is the net amount of money moving in and out of your business. In real estate, it is calculated as:
Positive cash flow means the property pays for itself and generates profit every month. Negative cash flow implies you must contribute money from your own pocket to keep the property running.
2. Capitalization Rate (Cap Rate)
The Cap Rate measures the natural rate of return on an investment property, assuming it was bought entirely with cash. It is useful for comparing the profitability of different properties regardless of how they are financed.
Cap Rate = (Net Operating Income / Purchase Price) × 100
Net Operating Income (NOI) is the annual income minus annual operating expenses (excluding mortgage payments). A higher Cap Rate generally indicates a better return, though it may come with higher risk.
3. Cash on Cash Return (CoC)
This is arguably the most important metric for investors using financing (a mortgage). It measures the annual return on the actual cash you invested (down payment + closing costs), rather than the total price of the home.
Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) × 100
For example, if you invest $50,000 to buy a $250,000 property and it generates $5,000 in cash flow per year, your Cash on Cash return is 10%.
How to Use This Calculator
Purchase Price: The total price you are paying for the property.
Closing Costs: Any fees paid at closing (title, origination fees, etc.).
Down Payment & Interest Rate: These determine your mortgage payment.
Monthly Expenses: Sum up property taxes, insurance, HOA fees, maintenance reserves, and property management fees. Be realistic here to get an accurate result.
What is a Good ROI?
A "good" ROI is subjective and depends on your investment strategy. However, many investors aim for a Cash on Cash return of 8-12%. In high-appreciation markets, investors might accept a lower cash flow (4-6%) banking on the property value increasing over time. Conversely, in markets with little appreciation, investors often demand higher cash flow returns (12%+).