Calculate Cash Flow, Cap Rate, and Cash-on-Cash Return
Monthly Mortgage Payment (P&I):$0.00
Monthly Net Cash Flow:$0.00
Annual Net Operating Income (NOI):$0.00
Cap Rate:0.00%
Cash on Cash Return:0.00%
How to Analyze a Rental Property Investment
Investing in real estate requires more than just buying a property and collecting rent. To ensure your investment is profitable, you need to understand key performance metrics. This Rental Property ROI Calculator helps you evaluate the potential profitability of a residential or commercial real estate investment.
Understanding the Key Metrics
1. Monthly Cash Flow
This is the money left over after all expenses are paid. A positive cash flow means the property pays for itself and generates income. Formula:Monthly Rent – (Mortgage + Taxes + Insurance + Maintenance + Vacancy).
2. Cap Rate (Capitalization Rate)
The Cap Rate measures the property's natural rate of return without considering mortgage financing. It helps compare properties purely on their price and income potential. Formula:Net Operating Income (NOI) / Purchase Price.
3. Cash on Cash Return (CoC)
This is arguably the most important metric for leveraged investors. It measures the annual return on the actual cash you invested (down payment + closing costs), rather than the total property value. Formula:Annual Pre-Tax Cash Flow / Total Cash Invested.
What is a "Good" ROI?
Cash Flow: Investors typically look for $100-$300 per door in net monthly profit.
Cap Rate: A cap rate of 5% to 10% is generally considered good, though this varies heavily by location (market tier).
Cash on Cash: Many investors aim for 8-12% CoC return, which often outperforms the stock market average.
Note: This calculator assumes a standard fixed-rate mortgage and estimates monthly expenses based on your input. Always account for vacancy rates and unexpected repairs in your personal analysis.
function calculateRentalROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
// 2. Validate Inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(years) || isNaN(rent) || isNaN(expenses)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (down >= price) {
alert("Down payment cannot be greater than or equal to purchase price for a mortgage calculation.");
return;
}
// 3. Logic & Calculations
// Mortgage Calculation (Principal & Interest)
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = years * 12;
// Standard Amortization Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mortgagePayment = 0;
if (rate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
} else {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Net Operating Income (NOI) = Annual Income – Annual Expenses (excluding debt service)
// Annual Rent
var annualRent = rent * 12;
// Annual Expenses (Ops)
var annualOpsExpenses = expenses * 12;
var noi = annualRent – annualOpsExpenses;
// Cash Flow calculation
var totalMonthlyCost = mortgagePayment + expenses;
var monthlyCashFlow = rent – totalMonthlyCost;
var annualCashFlow = monthlyCashFlow * 12;
// Cap Rate = NOI / Purchase Price
var capRate = (noi / price) * 100;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested (assuming down payment is total invested for simplicity here)
var cashOnCash = (annualCashFlow / down) * 100;
// 4. Update UI
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('resMortgage').innerHTML = "$" + mortgagePayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerHTML = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if(monthlyCashFlow < 0) {
cashFlowEl.style.color = "#e74c3c"; // Red for negative
} else {
cashFlowEl.style.color = "#27ae60"; // Green for positive
}
document.getElementById('resNOI').innerHTML = "$" + noi.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
var cocEl = document.getElementById('resCoC');
cocEl.innerHTML = cashOnCash.toFixed(2) + "%";
if(cashOnCash < 0) {
cocEl.style.color = "#e74c3c";
} else {
cocEl.style.color = "#27ae60";
}
}