How is Fixed Rate Mortgage Calculated

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Rental Property ROI & Cash Flow Calculator

Monthly Principal & Interest:
Total Monthly Cash Outflow:
Net Monthly Cash Flow:
Cash on Cash ROI:
Cap Rate:

Understanding Your Rental Property Numbers

Investing in real estate is a numbers game. Unlike buying a primary residence, where emotion plays a large role, a rental property must make mathematical sense. This calculator focuses on the three most critical metrics for buy-and-hold investors: Cash Flow, Cash on Cash Return, and Cap Rate.

1. Net Monthly Cash Flow

This is the money left over after all bills are paid. It is calculated as:

  • Income: Monthly Rent
  • Expenses: Mortgage (Principal & Interest) + Taxes + Insurance + Maintenance + HOA + Vacancy Reserves

Positive cash flow ensures the property pays for itself. A common rule of thumb for beginners is to aim for at least $100-$200 per door in net positive cash flow per month.

2. Cash on Cash Return (CoC ROI)

While cash flow tells you dollar amounts, Cash on Cash Return tells you how hard your money is working. It measures the annual cash flow relative to the total cash invested (Down Payment + Closing Costs + Rehab Costs).

For example, if you invest $50,000 cash to buy a property and it generates $5,000 in net annual cash flow, your CoC ROI is 10%. This allows you to compare real estate returns directly against other investments like stocks or bonds.

3. Capitalization Rate (Cap Rate)

The Cap Rate measures the natural rate of return of the property assuming it was bought with all cash (no mortgage). It is calculated by dividing the Net Operating Income (NOI) by the Purchase Price.

NOI differs from cash flow because it does not include mortgage payments. Cap Rate is essential for comparing the intrinsic value of two properties regardless of how they are financed.

How to Use This Calculator

To get the most accurate results, ensure you estimate your "Monthly Expenses" conservatively. This field should include property taxes, landlord insurance, HOA fees (if applicable), and a reserve fund for repairs and vacancy (typically 5-10% of rent).

function calculateRentalROI() { // 1. Get Input Values var price = parseFloat(document.getElementById('purchasePrice').value); var downPercent = parseFloat(document.getElementById('downPayment').value); var rate = parseFloat(document.getElementById('interestRate').value); var term = parseFloat(document.getElementById('loanTerm').value); var rent = parseFloat(document.getElementById('monthlyRent').value); var expenses = parseFloat(document.getElementById('monthlyExpenses').value); // 2. Validation if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(term) || isNaN(rent) || isNaN(expenses)) { alert("Please fill in all fields with valid numbers."); return; } // 3. Core Calculations // Loan Calculation var downPaymentAmount = price * (downPercent / 100); var loanAmount = price – downPaymentAmount; // Monthly Interest Rate var monthlyRate = (rate / 100) / 12; var numberOfPayments = term * 12; // Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] var monthlyMortgage = 0; if (rate === 0) { monthlyMortgage = loanAmount / numberOfPayments; } else { monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1); } // Total Monthly Outflow var totalMonthlyCost = monthlyMortgage + expenses; // Cash Flow var monthlyCashFlow = rent – totalMonthlyCost; var annualCashFlow = monthlyCashFlow * 12; // Cash on Cash Return // Formula: (Annual Cash Flow / Total Cash Invested) * 100 // Assuming Cash Invested = Down Payment for this simplified tool var cashInvested = downPaymentAmount; var cocRoi = 0; if (cashInvested > 0) { cocRoi = (annualCashFlow / cashInvested) * 100; } // Cap Rate Calculation // NOI = Annual Rent – Annual Operating Expenses (Excluding Mortgage) var annualRent = rent * 12; var annualExpenses = expenses * 12; var noi = annualRent – annualExpenses; var capRate = (noi / price) * 100; // 4. Update UI document.getElementById('resultsArea').style.display = 'block'; // Formatting currency var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 2 }); document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage); document.getElementById('resTotalCost').innerText = formatter.format(totalMonthlyCost); // Cash Flow Styling var cashFlowEl = document.getElementById('resCashFlow'); cashFlowEl.innerText = formatter.format(monthlyCashFlow); if (monthlyCashFlow >= 0) { cashFlowEl.style.color = '#27ae60'; } else { cashFlowEl.style.color = '#c0392b'; } // Percentages document.getElementById('resCOC').innerText = cocRoi.toFixed(2) + "%"; document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%"; }

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