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Rental Property ROI Calculator

Investment Analysis Results

Total Investment:

Annual Net Operating Income (NOI):

Monthly Cash Flow:

Cap Rate:

Cash on Cash Return:

Operating Expense Ratio:

function calculateRentalROI() { var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0; var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0; var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0; var repairCosts = parseFloat(document.getElementById('repairCosts').value) || 0; var annualTaxes = parseFloat(document.getElementById('annualTaxes').value) || 0; var annualInsurance = parseFloat(document.getElementById('annualInsurance').value) || 0; var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0; var mgmtFee = parseFloat(document.getElementById('mgmtFee').value) || 0; // Totals var totalInvestment = purchasePrice + closingCosts + repairCosts; var grossAnnualIncome = monthlyRent * 12; // Expenses var annualVacancy = grossAnnualIncome * (vacancyRate / 100); var annualMgmt = mgmtFee * 12; var totalAnnualExpenses = annualTaxes + annualInsurance + annualVacancy + annualMgmt; // Returns var annualNOI = grossAnnualIncome – totalAnnualExpenses; var monthlyCashFlow = annualNOI / 12; var capRate = (annualNOI / purchasePrice) * 100; var cashOnCash = (annualNOI / totalInvestment) * 100; var oer = (totalAnnualExpenses / grossAnnualIncome) * 100; // Display document.getElementById('resTotalInv').innerText = '$' + totalInvestment.toLocaleString(); document.getElementById('resNOI').innerText = '$' + annualNOI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCashFlow').innerText = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCapRate').innerText = capRate.toFixed(2) + '%'; document.getElementById('resCoC').innerText = cashOnCash.toFixed(2) + '%'; document.getElementById('resOER').innerText = oer.toFixed(2) + '%'; document.getElementById('roi-results').style.display = 'block'; }

How to Use the Rental Property ROI Calculator

Return on Investment (ROI) is the most critical metric for real estate investors. It helps you determine if a property is a profitable asset or a financial liability. This calculator uses the "All-Cash" purchase logic to establish a baseline of profitability, including Net Operating Income (NOI), Cap Rate, and Cash-on-Cash Return.

Key Metrics Explained

  • Cap Rate (Capitalization Rate): This measures the ratio between the Net Operating Income and the original purchase price. It allows you to compare different properties regardless of how they are financed.
  • Cash-on-Cash Return: This is the ratio of annual before-tax cash flow to the total amount of cash invested. Unlike Cap Rate, this accounts for your "out of pocket" costs like closing fees and renovations.
  • Net Operating Income (NOI): This is your total income minus all necessary operating expenses. Note that NOI does not include mortgage payments (debt service), as it focuses on the property's performance.
  • Operating Expense Ratio (OER): A measure of what percentage of your gross income is being consumed by operating costs. A lower OER generally indicates a more efficient investment.

Example ROI Calculation

Imagine you buy a duplex for $300,000. You spend $10,000 on closing costs and $20,000 on new flooring and paint. Your total investment is $330,000.

If you rent both units for a total of $3,000 per month, your gross annual income is $36,000. After subtracting taxes ($4,000), insurance ($1,500), and a 10% vacancy/maintenance fund ($3,600), your NOI would be $26,900.

  • Cap Rate: $26,900 / $300,000 = 8.97%
  • Cash-on-Cash Return: $26,900 / $330,000 = 8.15%

Tips for Maximizing Rental Returns

To improve your ROI, focus on two levers: increasing income or decreasing expenses. Common strategies include adding amenities (like in-unit laundry) to justify higher rent, or appealing property tax assessments to lower annual expenses. Always include a "Vacancy Rate" in your calculations (usually 5-10%) to ensure you have a realistic safety net for when the property is un-rented between tenants.

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