How to Calculate Continuously Compounded Interest Rate
by
Rental Property ROI Calculator
Calculate your Cash-on-Cash Return and Cap Rate instantly.
Acquisition Costs
Financing
Monthly Cash Flow
(Tax, Insurance, HOA, Maintenance)
Monthly Cash Flow$0
Cash-on-Cash Return0%
Cap Rate0%
Total Out of Pocket$0
Understanding Your Rental Property ROI
Investing in real estate requires more than just a gut feeling; it requires a deep dive into the numbers. Our Rental Property ROI (Return on Investment) calculator helps real estate investors analyze potential deals by looking at the three most critical metrics: Cash Flow, Cash-on-Cash Return, and Cap Rate.
1. Monthly Cash Flow
This is the amount of money left over after every single expense and the mortgage payment has been paid. Positive cash flow is the "lifeblood" of rental investing, providing the liquidity needed to handle vacancies or emergency repairs.
2. Cash-on-Cash Return (CoC)
This is perhaps the most important metric for investors using financing. It measures the annual cash flow relative to the actual "liquid cash" you put into the deal (down payment, closing costs, and repairs).
Formula: (Annual Cash Flow ÷ Total Initial Cash Investment) x 100.
3. Cap Rate (Capitalization Rate)
Cap rate measures the property's natural rate of return without considering financing. It allows you to compare different properties on an apples-to-apples basis regardless of how they are financed.
Formula: (Net Operating Income ÷ Purchase Price) x 100.
Example Calculation
Scenario: You buy a duplex for $300,000.
Down Payment: $60,000 (20%)
Closing/Repairs: $21,000
Total Cash Invested: $81,000
Monthly Rent: $2,500
Total Monthly Expenses (Mortgage + Costs): $2,100
Result: $400 Monthly Cash Flow ($4,800 annually). Your Cash-on-Cash Return would be 5.92%.
Top Factors Influencing ROI
Location: High-demand areas typically have lower cap rates but higher appreciation potential.
Financing Terms: A lower interest rate drastically increases your monthly cash flow and Cash-on-Cash return.
Property Management: Self-managing saves money but consumes time; professional management usually costs 8-12% of gross rent.
Maintenance Reserve: Always set aside 5-10% for future repairs to avoid "surprise" negative cash flow months.
function calculateRentalROI() {
// Inputs
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value) || 0;
var repairCosts = parseFloat(document.getElementById("repairCosts").value) || 0;
var closingCosts = parseFloat(document.getElementById("closingCosts").value) || 0;
var downPercent = parseFloat(document.getElementById("downPaymentPercent").value) || 0;
var interestRate = parseFloat(document.getElementById("interestRate").value) || 0;
var loanTerm = parseFloat(document.getElementById("loanTerm").value) || 0;
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value) || 0;
var monthlyExp = parseFloat(document.getElementById("monthlyExpenses").value) || 0;
// Calculations
var downPaymentAmount = purchasePrice * (downPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var totalInitialInvestment = downPaymentAmount + repairCosts + closingCosts;
// Mortgage Calculation (Monthly)
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;
}
// Cash Flow
var totalMonthlyOutgo = monthlyMortgage + monthlyExp;
var monthlyCashFlow = monthlyRent – totalMonthlyOutgo;
var annualCashFlow = monthlyCashFlow * 12;
// Metrics
var cocReturn = (totalInitialInvestment > 0) ? (annualCashFlow / totalInitialInvestment) * 100 : 0;
// Net Operating Income (NOI) for Cap Rate
var annualIncome = monthlyRent * 12;
var annualOperatingExpenses = monthlyExp * 12;
var noi = annualIncome – annualOperatingExpenses;
var capRate = (purchasePrice > 0) ? (noi / purchasePrice) * 100 : 0;
// Display Results
document.getElementById("roi-results").style.display = "block";
document.getElementById("res-cashflow").innerHTML = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("res-coc").innerHTML = cocReturn.toFixed(2) + "%";
document.getElementById("res-caprate").innerHTML = capRate.toFixed(2) + "%";
document.getElementById("res-investment").innerHTML = "$" + totalInitialInvestment.toLocaleString();
// Scroll to results
document.getElementById("roi-results").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}