How to Calculate Property Taxes

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Rental Property ROI Calculator

Calculate your potential real estate investment returns and Cap Rate

Investment Costs

Monthly Cash Flow

Tax, Insurance, HOA, Maintenance

Investment Summary

Total Initial Investment $0
Monthly Cash Flow $0
Annual ROI (Cash-on-Cash) 0%
Cap Rate 0%

Understanding Your Rental Property ROI

Investing in real estate is a powerful way to build wealth, but the "Return on Investment" (ROI) is more complex than just subtracting your mortgage from your rent. To truly understand if a deal is good, you need to look at multiple financial metrics.

Key Real Estate Metrics Explained

  • Cap Rate (Capitalization Rate): This measures the property's natural rate of return without considering financing. It is calculated by dividing the Net Operating Income (NOI) by the purchase price.
  • Cash-on-Cash Return: This is the actual cash you receive divided by the actual cash you invested (down payment, closing costs, and repairs). This is often considered the most important "real-world" metric for rental investors.
  • Net Operating Income (NOI): This is your total annual income minus all operating expenses (taxes, insurance, maintenance), but before debt service (mortgage).

Example Calculation

Imagine you buy a condo for $200,000. You spend $5,000 on closing and $5,000 on paint and carpets. Your total investment is $210,000.

If the monthly rent is $1,800 and your combined expenses (taxes, insurance, HOA) are $500, your Monthly Net Income is $1,300. If you have no mortgage, your annual ROI would be ($1,300 × 12) / $210,000 = 7.4%.

Ways to Improve Your Rental ROI

  1. Reduce Vacancy: Even one month of vacancy can destroy your annual profits. Screen tenants well to ensure long-term stays.
  2. Value-Add Renovations: Focus on upgrades that allow for higher rent, such as modern kitchens or adding an extra bedroom.
  3. Tax Deductions: Don't forget to account for depreciation and interest deductions during tax season to increase your "after-tax" ROI.
function calculateRentalROI() { // Get Input Values var price = parseFloat(document.getElementById('purchasePrice').value) || 0; var closing = parseFloat(document.getElementById('closingCosts').value) || 0; var repairs = parseFloat(document.getElementById('repairBudget').value) || 0; var rent = parseFloat(document.getElementById('monthlyRent').value) || 0; var expenses = parseFloat(document.getElementById('monthlyExpenses').value) || 0; var mortgage = parseFloat(document.getElementById('monthlyMortgage').value) || 0; // Logic Calculations var totalInvestment = price + closing + repairs; // Monthly & Annual Cash Flow var monthlyCashFlow = rent – expenses – mortgage; var annualCashFlow = monthlyCashFlow * 12; // NOI (Net Operating Income – excludes mortgage) var annualNOI = (rent – expenses) * 12; // Cap Rate (NOI / Purchase Price) var capRate = (price > 0) ? (annualNOI / price) * 100 : 0; // ROI / Cash on Cash (Annual Cash Flow / Total Cash Invested) // Note: If user paid cash, mortgage is 0 and this is standard ROI var roi = (totalInvestment > 0) ? (annualCashFlow / totalInvestment) * 100 : 0; // Display Results document.getElementById('resTotalInvestment').innerHTML = '$' + totalInvestment.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('resMonthlyCashFlow').innerHTML = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resROI').innerHTML = roi.toFixed(2) + '%'; document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%'; // Show result area document.getElementById('resultsArea').style.display = 'block'; // Smooth scroll to results document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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