function calculateRentalROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById("purchasePrice").value) || 0;
var downPay = parseFloat(document.getElementById("downPayment").value) || 0;
var closing = parseFloat(document.getElementById("closingCosts").value) || 0;
var interest = 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("annualTax").value) || 0;
var insurance = parseFloat(document.getElementById("annualInsurance").value) || 0;
var maintPerc = parseFloat(document.getElementById("maintenance").value) || 0;
var vacPerc = parseFloat(document.getElementById("vacancy").value) || 0;
// 2. Calculate Mortgage (Principal & Interest)
var loanAmount = price – downPay;
var monthlyRate = (interest / 100) / 12;
var numPayments = years * 12;
var mortgagePayment = 0;
if (interest === 0) {
if (years > 0) {
mortgagePayment = loanAmount / numPayments;
}
} else {
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var pow = Math.pow(1 + monthlyRate, numPayments);
if (pow > 1) { // prevent divide by zero logic issues
mortgagePayment = (loanAmount * monthlyRate * pow) / (pow – 1);
}
}
// 3. Calculate Operating Expenses (Monthly)
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var monthlyMaint = rent * (maintPerc / 100);
var monthlyVac = rent * (vacPerc / 100);
var operatingExpenses = monthlyTax + monthlyIns + monthlyMaint + monthlyVac;
var totalExpenses = operatingExpenses + mortgagePayment;
// 4. Calculate Key Metrics
var monthlyCashFlow = rent – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var totalCashInvested = downPay + closing;
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// NOI = Income – Operating Expenses (excluding mortgage)
var monthlyNOI = rent – operatingExpenses;
var annualNOI = monthlyNOI * 12;
// Cap Rate = (Annual NOI / Purchase Price) * 100
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Update DOM
var resArea = document.getElementById("resultsArea");
resArea.style.display = "block";
// Helper for currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
// Helper for coloring negative values
function updateVal(id, value, isCurrency, isPercent) {
var el = document.getElementById(id);
if (isCurrency) el.textContent = fmt.format(value);
if (isPercent) el.textContent = value.toFixed(2) + "%";
// Color logic
if (value < 0) {
el.classList.add("negative");
} else {
el.classList.remove("negative");
}
}
updateVal("resCashFlow", monthlyCashFlow, true, false);
updateVal("resCoC", cocReturn, false, true);
updateVal("resCapRate", capRate, false, true);
updateVal("resNOI", monthlyNOI, true, false);
updateVal("resInvested", totalCashInvested, true, false);
updateVal("resMortgage", mortgagePayment, true, false);
}
Understanding Your Rental Property ROI
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To succeed, you must analyze the numbers objectively. This Rental Property ROI Calculator helps investors determine the viability of a potential investment by calculating critical metrics like Cash Flow, Cash-on-Cash Return, and Cap Rate.
What is Cash on Cash Return?
Cash on Cash (CoC) Return is arguably the most important metric for rental investors. Unlike standard ROI which might look at the total loan value, CoC Return measures the annual cash income earned on the cash you actually invested (Down Payment + Closing Costs).
The Formula: Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
A good CoC return varies by market, but many investors aim for 8-12% in the current economic climate. This calculator computes this automatically based on your financing terms.
Understanding Cap Rate vs. ROI
While ROI measures your specific return based on your financing, the Capitalization Rate (Cap Rate) measures the property's natural profitability, assuming it was bought with all cash.
Cap Rate: Useful for comparing different properties against each other, regardless of how they are financed. It is calculated by dividing Net Operating Income (NOI) by the Purchase Price.
ROI / Cash on Cash: Useful for understanding how hard your specific money is working for you after leverage (loans) is applied.
Why Factor in Vacancy and Maintenance?
New investors often make the mistake of calculating profit as simply Rent minus Mortgage. This is a recipe for disaster. Real estate assets depreciate physically and experience gaps in tenancy.
Vacancy Rate: This accounts for months where the property sits empty between tenants. A standard conservative estimate is 5-8% (approx. 2-3 weeks per year).
Maintenance: Even if nothing breaks this month, you must set aside a percentage of rent (typically 5-10%) for future repairs like water heaters, roofs, or painting.
Frequently Asked Questions
Q: Does this calculator include appreciation?
A: No. This tool focuses on Cash Flow ROI. Appreciation is speculative "bonus" money, whereas cash flow ensures you can pay the bills today.
Q: How do I calculate Net Operating Income (NOI)?
A: NOI is calculated by subtracting all operating expenses (Taxes, Insurance, Maintenance, Vacancy, Management Fees) from the total income. Importantly, NOI does not include mortgage payments.
Q: What is a "Cash Flow Negative" property?
A: If the calculator shows a negative Monthly Net Cash Flow, the rental income is not covering the expenses and debt service. You would have to pay out of pocket every month to keep the property.