Home Loan Interest Rate Calculator

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Rental Property ROI Calculator

Monthly Mortgage:

$0

Monthly Cash Flow:

$0

Cap Rate:

0%

Cash-on-Cash Return:

0%

function calculateRentalROI() { var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var downPaymentPercent = parseFloat(document.getElementById('downPaymentPercent').value); var interestRate = parseFloat(document.getElementById('interestRate').value); var loanTerm = parseFloat(document.getElementById('loanTerm').value); var monthlyRent = parseFloat(document.getElementById('monthlyRent').value); var otherExpenses = parseFloat(document.getElementById('otherExpenses').value); if (isNaN(purchasePrice) || isNaN(monthlyRent)) { alert("Please enter valid numbers"); return; } var downPayment = purchasePrice * (downPaymentPercent / 100); var loanAmount = purchasePrice – downPayment; var monthlyInterest = (interestRate / 100) / 12; var numberOfPayments = loanTerm * 12; var monthlyMortgage = 0; if (interestRate > 0) { monthlyMortgage = loanAmount * (monthlyInterest * Math.pow(1 + monthlyInterest, numberOfPayments)) / (Math.pow(1 + monthlyInterest, numberOfPayments) – 1); } else { monthlyMortgage = loanAmount / numberOfPayments; } var totalMonthlyOutgo = monthlyMortgage + otherExpenses; var monthlyCashFlow = monthlyRent – totalMonthlyOutgo; var annualNetOperatingIncome = (monthlyRent – otherExpenses) * 12; var capRate = (annualNetOperatingIncome / purchasePrice) * 100; var annualCashFlow = monthlyCashFlow * 12; var cashOnCashReturn = (annualCashFlow / downPayment) * 100; document.getElementById('resMortgage').innerText = '$' + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCashFlow').innerText = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCapRate').innerText = capRate.toFixed(2) + '%'; document.getElementById('resCoC').innerText = cashOnCashReturn.toFixed(2) + '%'; document.getElementById('results-box').style.display = 'block'; }

Understanding Rental Property ROI Calculations

Investing in real estate requires more than just a gut feeling; it requires a deep dive into the numbers. Our Rental Property ROI Calculator helps you determine if a potential investment property will generate positive cash flow or if it will become a "money pit."

Key Metrics Explained

  • Monthly Cash Flow: This is the amount of money left over every month after all bills—including the mortgage, taxes, insurance, and maintenance—have been paid. Positive cash flow is essential for long-term sustainability.
  • Cap Rate (Capitalization Rate): This represents the natural rate of return for a property, assuming it was bought with cash. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. A higher cap rate usually indicates higher risk but higher reward.
  • Cash-on-Cash Return: This is often considered the most important metric for investors using financing. It measures the annual cash flow relative to the actual cash you invested (your down payment and closing costs).

Example Calculation

Let's look at a realistic scenario for a residential rental property:

Property Details:
  • Purchase Price: $300,000
  • Down Payment: $60,000 (20%)
  • Monthly Rent: $2,500
  • Mortgage (6.5%): $1,517
  • Taxes/Insurance/Repairs: $500/month

In this case, your total monthly expenses are $2,017. Your Monthly Cash Flow would be $483. Your Cash-on-Cash Return would be approximately 9.6%, calculated by taking your annual profit ($5,796) and dividing it by your $60,000 investment.

Tips for Maximizing Your ROI

To improve your rental returns, consider these three strategies:

  1. Reduce Vacancy Rates: Every month your property sits empty, your ROI plummets. Focus on tenant retention and efficient marketing.
  2. Value-Add Renovations: Upgrading kitchens or adding a laundry unit can allow you to increase rent significantly without increasing your mortgage payment.
  3. Refinance: If interest rates drop, refinancing your loan can lower your monthly mortgage payment, instantly boosting your monthly cash flow.

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