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Rental Property ROI Calculator

Analyze cash flow, Cap Rate, and Cash on Cash Return for your investment property.

(Taxes, Ins, HOA, Repairs)

Investment Analysis

Monthly Cash Flow $0.00
Cash on Cash ROI 0.00%
Cap Rate 0.00%
Est. Mortgage Payment $0.00
Total Monthly Expenses $0.00
Net Operating Income (Annual) $0.00

How to Calculate 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, investors must analyze the numbers before signing on the dotted line. This Rental Property ROI Calculator helps you determine if a specific property will generate positive cash flow.

Understanding the Key Metrics

When analyzing a rental deal, there are three critical numbers to look at:

  • Cash Flow: This is the profit you take home every month after paying the mortgage, taxes, insurance, and all other operating expenses. Positive cash flow is essential for long-term sustainability.
  • Cash on Cash Return (CoC ROI): This metric measures the annual return on the actual cash you invested (your down payment plus closing costs). It's a true measure of how hard your money is working for you compared to other investments like stocks.
  • Cap Rate (Capitalization Rate): This percentage indicates the rate of return based on the income the property generates, independent of financing. It helps compare the profitability of different properties regardless of how they are purchased (cash vs. loan).

The Cash Flow Formula

The basic formula used in this calculator is:

Cash Flow = Rental Income – (Mortgage Payment + Operating Expenses + Vacancy Reserves)

Never ignore the Vacancy Rate. Even in hot markets, you should budget for at least 5% vacancy to cover turnover times between tenants.

What is a Good ROI for Rental Property?

While "good" is subjective, many investors aim for a Cash on Cash return of 8% to 12%. However, in high-appreciation markets, investors might accept a lower monthly cash flow (around 4-6%) banking on the property value increasing over time. Conversely, in stable markets with lower appreciation, investors often demand higher immediate cash flow returns.

function calculateRentalROI() { // 1. Get Inputs var price = parseFloat(document.getElementById('purchasePrice').value); var downPercent = parseFloat(document.getElementById('downPayment').value); var interestRate = parseFloat(document.getElementById('interestRate').value); var termYears = parseFloat(document.getElementById('loanTerm').value); var rent = parseFloat(document.getElementById('monthlyRent').value); var expenses = parseFloat(document.getElementById('monthlyExpenses').value); var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value); // 2. Validation if (isNaN(price) || isNaN(downPercent) || isNaN(rent) || isNaN(expenses)) { alert("Please fill in all required numeric fields (Price, Down Payment, Rent, Expenses)."); return; } // Handle defaults for non-critical empty fields to prevent NaN if (isNaN(interestRate)) interestRate = 0; if (isNaN(termYears)) termYears = 30; if (isNaN(vacancyPercent)) vacancyPercent = 0; // 3. Logic Calculation // Mortgage Calculation var downPaymentAmount = price * (downPercent / 100); var loanAmount = price – downPaymentAmount; var monthlyRate = (interestRate / 100) / 12; var numberOfPayments = termYears * 12; var monthlyMortgage = 0; if (interestRate > 0 && loanAmount > 0) { // Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1); } // Vacancy Loss Calculation var vacancyLoss = rent * (vacancyPercent / 100); // Total Monthly Expenses (Operating + Mortgage) var totalMonthlyExpenses = expenses + vacancyLoss + monthlyMortgage; // Cash Flow var monthlyCashFlow = rent – totalMonthlyExpenses; var annualCashFlow = monthlyCashFlow * 12; // Net Operating Income (NOI) = Income – Operating Expenses (Excluding Mortgage) var annualNOI = (rent * 12) – ((expenses + vacancyLoss) * 12); // Cap Rate = NOI / Purchase Price var capRate = (annualNOI / price) * 100; // Cash on Cash Return = Annual Cash Flow / Total Cash Invested // Assuming Cash Invested is just the Down Payment for this simple calc (could add closing costs) var cashInvested = downPaymentAmount; var cashOnCash = 0; if (cashInvested > 0) { cashOnCash = (annualCashFlow / cashInvested) * 100; } // 4. Update UI // Formatter var currencyFmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }); document.getElementById('resCashFlow').innerText = currencyFmt.format(monthlyCashFlow); document.getElementById('resMortgage').innerText = currencyFmt.format(monthlyMortgage); document.getElementById('resTotalExp').innerText = currencyFmt.format(totalMonthlyExpenses); document.getElementById('resNOI').innerText = currencyFmt.format(annualNOI); document.getElementById('resCoC').innerText = cashOnCash.toFixed(2) + "%"; document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%"; // Color coding for Cash Flow var cfElement = document.getElementById('resCashFlow'); if (monthlyCashFlow >= 0) { cfElement.classList.remove('highlight-negative'); cfElement.classList.add('highlight-positive'); } else { cfElement.classList.remove('highlight-positive'); cfElement.classList.add('highlight-negative'); } // Show Results document.getElementById('resultsSection').style.display = "block"; }

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