Rental Property ROI Calculator
Acquisition Costs
Monthly Cash Flow
Understanding Your Rental Property ROI
Investing in real estate is one of the most proven ways to build long-term wealth, but success hinges on running the numbers accurately before you sign a closing statement. Our Rental Property ROI Calculator helps you determine the potential profitability of a residential investment.
Key Metrics Explained
Total Cash Investment: This is the actual amount of liquid cash you put into the deal. It includes your down payment, closing costs, and initial repairs. This is the denominator for your Cash-on-Cash return.
Annual Cash Flow: This is the "pocket money" left over at the end of the year after every single expense—mortgage, taxes, insurance, and maintenance—has been paid.
Cap Rate (Capitalization Rate): This measures the property's natural yield regardless of financing. It is calculated by taking the Net Operating Income (NOI) and dividing it by the purchase price. It is useful for comparing the intrinsic value of different properties.
Cash on Cash Return (CoC): For most investors, this is the most important number. It tells you the percentage return on the actual cash you invested. If you invest $50,000 and see a $5,000 annual profit, your CoC return is 10%.
Example Calculation
Imagine you buy a duplex for $300,000. You put $60,000 down (20%) and spend $10,000 on closing and repairs. Your total cash out of pocket is $70,000.
If the property rents for $3,000 total and your total expenses (mortgage, tax, insurance) are $2,200, your monthly cash flow is $800. Multiply that by 12, and you have $9,600 in annual profit. Your ROI (Cash on Cash) would be $9,600 / $70,000 = 13.7%.