Rental Property Cash Flow & ROI Calculator
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Analysis Results
Cash on Cash Return
0.00%
Net Operating Income (NOI)
$0.00
Monthly Mortgage Payment: $0.00
Understanding Rental Property Analysis
Investing in real estate is a numbers game. To ensure a profitable investment, you must move beyond the "gross rent" figure and analyze the true performance of an asset. This Rental Property ROI Calculator helps investors determine key metrics like Cash Flow, Cap Rate, and Cash-on-Cash Return.
Key Metrics Explained
1. Cash Flow
Cash flow is the profit remaining after all expenses and debt service (mortgage payments) are paid. Positive cash flow is essential for long-term sustainability. It is calculated as:
Cash Flow = (Gross Rent – Vacancy Loss – Operating Expenses) – Mortgage Payment
2. Cash-on-Cash Return (CoC)
This is arguably the most important metric for investors using leverage (loans). It measures the annual return on the actual cash you invested, not the total property price. A healthy CoC return often ranges from 8% to 12% or higher, depending on the market risk.
Formula: Annual Cash Flow / Total Cash Invested (Down Payment + Closing Costs)
3. Cap Rate (Capitalization Rate)
Cap Rate measures the property's natural rate of return without considering debt financing. It allows you to compare properties apples-to-apples, regardless of how they are purchased (cash vs. loan).
Formula: Net Operating Income (NOI) / Purchase Price
Why Include Vacancy Rates?
No property is occupied 100% of the time. Professional investors always factor in a "vacancy loss"—typically 5% to 8%—to account for turnover periods between tenants. Failing to account for this can lead to overestimating your returns.
Estimating Operating Expenses
When using the "Monthly Expenses" field above, ensure you include:
- Property Taxes
- Landlord Insurance
- HOA Fees (if applicable)
- Maintenance and Repairs (reserve 5-10% of rent)
- Property Management Fees (typically 8-10% of rent)
How to Interpret Your Results
If your Cash Flow is negative, the property is a liability that costs you money every month. If your Cash-on-Cash Return is lower than what you could earn in the stock market (e.g., under 5-7%), you may want to reconsider the purchase price or find ways to increase rental income.
function calculateRentalROI() {
// 1. Get input values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPmt = parseFloat(document.getElementById('downPayment').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var termYears = parseFloat(document.getElementById('loanTerm').value);
var grossRent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
// Validation
if (isNaN(price) || isNaN(downPmt) || isNaN(interestRate) || isNaN(termYears) || isNaN(grossRent) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 2. Calculate Mortgage Payment
var loanAmount = price – downPmt;
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = termYears * 12;
var mortgagePayment = 0;
if (interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
mortgagePayment = loanAmount / totalPayments;
}
// 3. Calculate Operating Figures (Monthly)
var vacancyLoss = grossRent * (vacancyRate / 100);
var effectiveGrossIncome = grossRent – vacancyLoss;
var noiMonthly = effectiveGrossIncome – expenses;
var cashFlowMonthly = noiMonthly – mortgagePayment;
// 4. Calculate Annual Figures for ROI
var noiAnnual = noiMonthly * 12;
var cashFlowAnnual = cashFlowMonthly * 12;
var totalInvestment = downPmt + closingCosts;
// 5. Calculate Returns
var capRate = (noiAnnual / price) * 100;
var cocReturn = 0;
if (totalInvestment > 0) {
cocReturn = (cashFlowAnnual / totalInvestment) * 100;
}
// 6. Update DOM
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resCoc').innerHTML = cocReturn.toFixed(2) + "%";
// Color coding for Cash Flow
var cfElement = document.getElementById('resCashFlow');
cfElement.innerHTML = formatter.format(cashFlowMonthly);
if(cashFlowMonthly >= 0) {
cfElement.style.color = "#2c7744";
} else {
cfElement.style.color = "#c0392b";
}
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
document.getElementById('resNoi').innerHTML = formatter.format(noiAnnual); // Usually NOI is shown annually
document.getElementById('resMortgage').innerHTML = formatter.format(mortgagePayment);
// Show results
document.getElementById('resultsArea').style.display = 'block';
}