Rental Property ROI Calculator
Calculate Cash Flow, Cap Rate, and Cash on Cash Return
Please fill in all fields with valid numbers.
Monthly Principal & Interest:
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Total Monthly Expenses (w/ Mortgage):
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Net Operating Income (NOI) (Annual):
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Monthly Cash Flow:
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Cap Rate:
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Cash on Cash Return:
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How to Calculate Rental Property ROI
Understanding the return on investment (ROI) for a rental property is crucial for making informed real estate decisions. This calculator breaks down the profitability of an investment into three key metrics: Cash Flow, Cap Rate, and Cash on Cash Return.
1. Cash Flow
Cash flow is the net amount of money left over each month after all operating expenses and mortgage payments have been paid. Positive cash flow indicates a profitable month-to-month operation.
Formula: Monthly Rent – (Operating Expenses + Mortgage Payment)
2. Capitalization Rate (Cap Rate)
The Cap Rate measures the natural rate of return on the property independent of debt financing. It is useful for comparing the profitability of different properties as if you paid cash for them.
Formula: (Net Operating Income / Purchase Price) × 100
3. Cash on Cash Return
This is arguably the most important metric for investors using leverage (loans). It calculates the annual return specifically on the actual cash you invested (down payment + closing costs), rather than the total property value.
Formula: (Annual Cash Flow / Total Cash Invested) × 100
What is a Good ROI?
- Safe Bet: 4-6% Cash on Cash Return.
- Solid Performance: 8-12% Cash on Cash Return.
- High Performance: 15%+ (often involves higher risk or "fixer-upper" properties).
Remember to account for vacancies and maintenance reserves when estimating your monthly expenses to ensure your calculation remains conservative.