Real estate investing is widely considered one of the most reliable paths to wealth generation, but simply buying a property and renting it out does not guarantee a profit. To succeed, investors must rigorously analyze the numbers before signing a contract. This Rental Property ROI Calculator is designed to help you determine the viability of a potential investment by focusing on two critical metrics: Cash Flow and Cash on Cash Return.
Understanding Cash on Cash Return
Cash on Cash Return (CoC) is a metric often used in real estate transactions that calculates the cash income earned on the cash invested in a property. Unlike standard Return on Investment (ROI), which might include potential equity gains or appreciation, CoC focuses strictly on the immediate liquid return.
The formula is simple: Annual Pre-Tax Cash Flow / Total Cash Invested.
For example, if you put down $50,000 to buy a house and it generates $5,000 in net positive cash flow per year, your Cash on Cash return is 10%. This metric allows you to compare the profitability of real estate against other investments like stocks or bonds.
Key Inputs Explained
To get accurate results from the rental property calculator, it is essential to input realistic data:
Purchase Price & Down Payment: The total cost of the asset and your initial equity stake. A higher down payment reduces mortgage costs but increases the initial cash requirement, potentially lowering your CoC percentage.
Closing Costs: Often overlooked, these include title fees, recording fees, and loan origination charges. These are part of your "Total Cash Invested."
Operating Expenses: These are the costs to run the property. They include property taxes, landlord insurance, HOA fees, and property management fees.
Maintenance & CapEx: Experienced investors always budget for repairs. Setting aside 5-10% of monthly rent for maintenance ensures you aren't caught off guard by a broken water heater or roof leak.
What is a Good ROI for Rental Property?
There is no single "correct" number, as it depends on your strategy and the local market. However, general guidelines suggest:
8-12%: Considered a solid return in most stable markets.
15%+: Excellent returns, often found in lower-cost markets or properties requiring renovation (BRRRR strategy).
Below 5%: May not be worth the risk unless the property is in a high-appreciation area.
Positive vs. Negative Cash Flow
Positive Cash Flow means your rental income exceeds all expenses, including the mortgage. This is money in your pocket every month. Negative Cash Flow means you are losing money every month to hold the property. While some investors accept negative cash flow in exchange for massive future appreciation, it is generally a risky strategy for beginners. Always aim for positive cash flow to ensure the asset is self-sustaining.
Use this calculator to adjust your offer price or down payment amount until you find a scenario that meets your investment goals.
function calculateRentalROI() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var closing = parseFloat(document.getElementById('closingCosts').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('rentalIncome').value);
var taxYear = parseFloat(document.getElementById('propertyTax').value);
var insYear = parseFloat(document.getElementById('insurance').value);
var hoa = parseFloat(document.getElementById('hoaFees').value);
var maint = parseFloat(document.getElementById('maintenance').value);
// 2. Validate Inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(term) || isNaN(rent)) {
alert("Please enter valid numbers for at least the Purchase Price, Down Payment, Interest Rate, Term, and Rental Income.");
return;
}
// Default optional fields to 0 if empty
if (isNaN(closing)) closing = 0;
if (isNaN(taxYear)) taxYear = 0;
if (isNaN(insYear)) insYear = 0;
if (isNaN(hoa)) hoa = 0;
if (isNaN(maint)) maint = 0;
// 3. Calculate Loan Details
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numPayments = term * 12;
var monthlyMortgage = 0;
// Mortgage formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
if (rate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
monthlyMortgage = loanAmount / numPayments;
}
// 4. Calculate Expenses
var monthlyTax = taxYear / 12;
var monthlyIns = insYear / 12;
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + hoa + maint;
// 5. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 6. Calculate Returns (Cash on Cash)
var totalCashInvested = down + closing;
var cocRoi = 0;
if (totalCashInvested > 0) {
cocRoi = (annualCashFlow / totalCashInvested) * 100;
}
// 7. Update UI
document.getElementById('resultsArea').style.display = 'block';
// Format currency
var currencyFormatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('monthlyMortgageResult').innerText = currencyFormatter.format(monthlyMortgage);
document.getElementById('totalMonthlyExpensesResult').innerText = currencyFormatter.format(totalMonthlyExpenses);
var cfElement = document.getElementById('monthlyCashFlowResult');
cfElement.innerText = currencyFormatter.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfElement.className = "roi-result-value roi-highlight";
} else {
cfElement.className = "roi-result-value roi-highlight-bad";
}
document.getElementById('annualCashFlowResult').innerText = currencyFormatter.format(annualCashFlow);
document.getElementById('totalCashInvestedResult').innerText = currencyFormatter.format(totalCashInvested);
var roiElement = document.getElementById('cocRoiResult');
roiElement.innerText = cocRoi.toFixed(2) + "%";
if(cocRoi >= 0) {
roiElement.className = "roi-result-value roi-highlight";
} else {
roiElement.className = "roi-result-value roi-highlight-bad";
}
}