Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To succeed, investors must accurately analyze the numbers before signing a contract. A Rental Property ROI (Return on Investment) Calculator is an essential tool for determining whether a specific property will generate positive cash flow and provide a healthy return on your initial capital.
This calculator helps you analyze the profitability of a potential rental property by factoring in purchase costs, financing terms, rental income, and ongoing operating expenses. It computes critical metrics such as Cash Flow, Cash on Cash Return, and Cap Rate.
Purchase Info
Loan Details
Income & Expenses (Monthly)
Monthly Cash Flow
0
Cash on Cash Return
0%
Cap Rate
0%
Monthly Breakdown
Total Monthly Income:0
Mortgage Payment (P&I):0
Operating Expenses:0
Net Operating Income (NOI):0
function calculateROI() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var down = parseFloat(document.getElementById('downPayment').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var rate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var taxYearly = parseFloat(document.getElementById('propertyTax').value) || 0;
var insYearly = parseFloat(document.getElementById('insurance').value) || 0;
var hoaMonthly = parseFloat(document.getElementById('hoa').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
// 1. Calculate Mortgage Payment
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numPayments = years * 12;
var mortgagePayment = 0;
if (rate > 0 && years > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else if (rate === 0 && years > 0) {
mortgagePayment = loanAmount / numPayments;
}
// 2. Calculate Operating Expenses
var taxMonthly = taxYearly / 12;
var insMonthly = insYearly / 12;
var maintMonthly = rent * (maintPercent / 100);
var totalOpExpensesMonthly = taxMonthly + insMonthly + hoaMonthly + maintMonthly;
// 3. Calculate Cash Flow
var cashFlow = rent – mortgagePayment – totalOpExpensesMonthly;
// 4. Calculate Net Operating Income (NOI) – Yearly
var noiMonthly = rent – totalOpExpensesMonthly;
var noiYearly = noiMonthly * 12;
// 5. Calculate Returns
var totalCashInvested = down + closing;
var cashFlowYearly = cashFlow * 12;
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (cashFlowYearly / totalCashInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (noiYearly / price) * 100;
}
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
// Display Results
document.getElementById('results-area').style.display = 'block';
document.getElementById('resCashFlow').innerText = formatter.format(cashFlow);
document.getElementById('resCOC').innerText = cocReturn.toFixed(2) + '%';
document.getElementById('resCap').innerText = capRate.toFixed(2) + '%';
document.getElementById('resIncome').innerText = formatter.format(rent);
document.getElementById('resMortgage').innerText = formatter.format(mortgagePayment);
document.getElementById('resExpenses').innerText = formatter.format(totalOpExpensesMonthly);
document.getElementById('resNOI').innerText = formatter.format(noiMonthly);
// Style adjustments for positive/negative cash flow
var cfCard = document.getElementById('cf-card');
if (cashFlow >= 0) {
cfCard.classList.remove('negative');
cfCard.classList.add('positive');
} else {
cfCard.classList.remove('positive');
cfCard.classList.add('negative');
}
}
Understanding the Key Metrics
When analyzing a rental property, three metrics stand out as the most critical indicators of success. Understanding these will help you distinguish between a good deal and a money pit.
1. Cash Flow
Cash Flow is the net amount of money moving into or out of your pocket after all expenses are paid. It is calculated as:
Gross Rental Income – (Mortgage + Taxes + Insurance + HOA + Maintenance + Vacancy)
Positive cash flow ensures that the property pays for itself and provides passive income. Negative cash flow means you are subsidizing the property from your own pocket every month.
2. Cash on Cash Return (CoC)
The Cash on Cash Return measures the annual return on the actual cash you invested, rather than the total loan amount. It is the most practical metric for everyday investors because it answers the question: "How hard is my money working for me?"
For example, if you invest $50,000 (down payment + closing costs) and the property generates $5,000 in net cash flow per year, your Cash on Cash return is 10%. This is often compared against stock market returns to determine the efficiency of the investment.
3. Cap Rate (Capitalization Rate)
The Cap Rate indicates the rate of return on a real estate investment property based on the income that the property is expected to generate. Unlike CoC, Cap Rate ignores financing (mortgage payments). It is calculated by dividing the Net Operating Income (NOI) by the property's purchase price.
Cap Rate is useful for comparing the intrinsic value of different properties regardless of how they are purchased (cash vs. loan). A higher Cap Rate generally implies a better return but may come with higher risk or a less desirable location.
Common Operating Expenses to Watch
Novice investors often underestimate expenses, leading to inaccurate ROI calculations. Ensure you account for:
Vacancy Rates: No property is rented 100% of the time. Budgeting 5-10% of rent for vacancy is prudent.
Maintenance & Repairs: Roofs leak and toilets break. Setting aside 1% of the property value annually or 10% of the rent is standard practice.
Property Management: Even if you self-manage now, calculating a 10% management fee ensures the deal still works if you decide to hire a manager later.