function calculateROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('prop_price').value);
var repair = parseFloat(document.getElementById('prop_repair').value);
var down = parseFloat(document.getElementById('loan_down').value);
var rate = parseFloat(document.getElementById('loan_rate').value);
var term = parseFloat(document.getElementById('loan_term').value);
var rent = parseFloat(document.getElementById('monthly_rent').value);
var expenses = parseFloat(document.getElementById('monthly_expenses').value);
// 2. Validate Inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(term) || isNaN(rent) || isNaN(expenses)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
if (isNaN(repair)) repair = 0;
// 3. Logic Calculations
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
// Mortgage Calculation Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyMortgage = 0;
if (loanAmount > 0 && rate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && rate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
}
// Net Operating Income (NOI) = Income – Operating Expenses (Excluding Mortgage)
var monthlyNOI = rent – expenses;
var annualNOI = monthlyNOI * 12;
// Cash Flow = NOI – Mortgage
var monthlyCashFlow = monthlyNOI – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// Total Cash Invested (Cash to Close)
var totalInvestment = down + repair;
// Returns
var cashOnCash = 0;
if (totalInvestment > 0) {
cashOnCash = (annualCashFlow / totalInvestment) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 4. Update UI
document.getElementById('roi_results').style.display = 'block';
// Helper for currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('res_investment').innerHTML = fmt.format(totalInvestment);
document.getElementById('res_mortgage').innerHTML = fmt.format(monthlyMortgage);
document.getElementById('res_noi').innerHTML = fmt.format(monthlyNOI);
var cfEl = document.getElementById('res_cashflow');
cfEl.innerHTML = fmt.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfEl.className = "roi-result-value roi-highlight";
} else {
cfEl.className = "roi-result-value roi-highlight-bad";
}
var cocEl = document.getElementById('res_coc');
cocEl.innerHTML = cashOnCash.toFixed(2) + "%";
if(cashOnCash >= 0) {
cocEl.className = "roi-result-value roi-highlight";
} else {
cocEl.className = "roi-result-value roi-highlight-bad";
}
document.getElementById('res_cap').innerHTML = capRate.toFixed(2) + "%";
}
Why Use a Rental Property Calculator?
Investing in real estate is one of the most reliable ways to build wealth, but it requires precise mathematical analysis. A Rental Property Calculator is essential for investors to distinguish between a profitable asset and a money pit. By analyzing metrics like Cash on Cash Return and Cap Rate, you can remove emotion from the equation and make data-driven decisions.
Understanding the Key Metrics
When evaluating a rental property, two metrics stand out as the most critical indicators of performance:
Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (Down Payment + Closing Costs). Unlike a simple ROI, it accounts for leverage (the mortgage), giving you a realistic view of how hard your money is working. A CoC return of 8-12% is often considered a solid target for residential rentals.
Cap Rate (Capitalization Rate): This metric calculates the property's natural rate of return assuming you bought it for all cash. It is calculated by dividing the Net Operating Income (NOI) by the Purchase Price. Cap Rate is excellent for comparing properties across different markets, regardless of financing.
Net Operating Income (NOI) vs. Cash Flow
Many novice investors confuse NOI with Cash Flow. Net Operating Income is your total rental income minus operating expenses (like taxes, insurance, maintenance, and property management). Crucially, NOI does not include mortgage payments.
Cash Flow, on the other hand, is what remains after the mortgage debt service is paid from the NOI. Positive cash flow ensures the property pays for itself and provides passive income, while the mortgage pay-down builds equity over time.
Estimating Expenses Correctly
One of the biggest mistakes in rental property analysis is underestimating expenses. When using this calculator, ensure your "Monthly Operating Expenses" figure is robust. Consider including:
Vacancy Rate: Assume the property will be empty 5-8% of the year.
Maintenance & CapEx: Set aside 10-15% of rent for repairs and big-ticket items like roof or HVAC replacement.
Property Management: Even if you self-manage, account for 10% management fees to ensure the deal works if you decide to outsource later.
How Interest Rates Impact Your Investment
Interest rates play a massive role in your Cash on Cash return. A higher interest rate increases your monthly mortgage payment, which directly reduces your monthly cash flow. As shown in the calculator, even a 1% shift in interest rates can turn a positive cash flow property into a negative one. Always run scenarios with slightly higher rates to stress-test your investment.