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Calculate Cap Rate, Cash-on-Cash Return, and Monthly Cash Flow

Property Details

30 Years Fixed 20 Years Fixed 15 Years Fixed 10 Years Fixed

Income & Expenses

(Taxes, Insurance, Repairs, Vacancy, Management)

Analysis Summary

Monthly Mortgage

$0.00

Monthly Cash Flow

$0.00

Cap Rate

0.00%

Cash on Cash

0.00%

Total Initial Investment: $0.00

Net Operating Income (Annual): $0.00

Annual Cash Flow: $0.00

Understanding Your Rental Property ROI

Investing in real estate requires more than just a gut feeling. To ensure a property is a "good deal," savvy investors use several key metrics to evaluate potential profitability. This calculator helps you determine if a rental property will generate positive cash flow or if it will become a liability.

Key Metrics Explained

• Cap Rate (Capitalization Rate): This represents the natural rate of return for a property excluding financing. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. A higher cap rate usually indicates higher risk but higher potential reward.
• Cash-on-Cash (CoC) Return: This is the ratio of annual before-tax cash flow to the total amount of cash invested. Unlike Cap Rate, CoC return accounts for your mortgage and financing costs, showing the actual return on the "green dollars" you pulled out of your pocket.
• Net Operating Income (NOI): The total income generated by the property minus all necessary operating expenses (but before mortgage payments and taxes).
• Monthly Cash Flow: The amount of money left over every month after all expenses and the mortgage have been paid.

Example Calculation

Imagine you buy a property for $250,000 with a 20% down payment ($50,000). You secure a 30-year loan at 6.5% interest. Your monthly mortgage (Principal & Interest) would be approximately $1,264.

If the property rents for $2,200 per month and you have $600 in monthly operating expenses (taxes, insurance, maintenance), your total monthly outflow is $1,864 ($1,264 + $600). Your Monthly Cash Flow is $336. Over a year, that is $4,032. Your Cash-on-Cash return would be $4,032 / $50,000 = 8.06%.

function calculateRentalROI() { // Get Input Values var price = parseFloat(document.getElementById("purchasePrice").value); var downPercent = parseFloat(document.getElementById("downPaymentPercent").value); var interest = parseFloat(document.getElementById("interestRate").value); var term = parseFloat(document.getElementById("loanTerm").value); var rent = parseFloat(document.getElementById("monthlyRent").value); var expenses = parseFloat(document.getElementById("operatingExpenses").value); // Validation if (isNaN(price) || isNaN(downPercent) || isNaN(interest) || isNaN(rent) || isNaN(expenses)) { alert("Please enter valid numeric values in all fields."); return; } // Calculations var downPaymentAmount = price * (downPercent / 100); var loanAmount = price – downPaymentAmount; // Mortgage Calculation (P & I) var monthlyInterest = (interest / 100) / 12; var numberOfPayments = term * 12; var monthlyMortgage = 0; if (interest > 0) { monthlyMortgage = loanAmount * (monthlyInterest * Math.pow(1 + monthlyInterest, numberOfPayments)) / (Math.pow(1 + monthlyInterest, numberOfPayments) – 1); } else { monthlyMortgage = loanAmount / numberOfPayments; } var totalMonthlyExpenses = monthlyMortgage + expenses; var monthlyCashFlow = rent – totalMonthlyExpenses; var annualCashFlow = monthlyCashFlow * 12; // Net Operating Income (NOI) – Income minus operating expenses only (excludes debt service) var annualNOI = (rent * 12) – (expenses * 12); // Cap Rate var capRate = (annualNOI / price) * 100; // Cash on Cash Return var cocReturn = (annualCashFlow / downPaymentAmount) * 100; // Display Results document.getElementById("res_mortgage").innerText = "$" + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("res_cashflow").innerText = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("res_caprate").innerText = capRate.toFixed(2) + "%"; document.getElementById("res_coc").innerText = cocReturn.toFixed(2) + "%"; document.getElementById("res_investment").innerText = "$" + downPaymentAmount.toLocaleString(); document.getElementById("res_noi").innerText = "$" + annualNOI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("res_annualflow").innerText = "$" + annualCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); // Color coding for cash flow if (monthlyCashFlow < 0) { document.getElementById("res_cashflow").style.color = "#e74c3c"; } else { document.getElementById("res_cashflow").style.color = "#27ae60"; } } // Initial calculation on load window.onload = calculateRentalROI;