Mansa-x Interest Rate Calculator

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Rental Property ROI Calculator

Total Initial Investment

$0.00

Annual Net Cash Flow

$0.00

Annual ROI (Cash-on-Cash)

0.00%

Cap Rate

0.00%

How to Calculate Rental Property ROI

Calculating the Return on Investment (ROI) for a rental property is the most critical step for any real estate investor. It allows you to compare different properties and determine which one will generate the most wealth over time.

Key Metrics Explained

  • Total Investment: This isn't just the purchase price. It includes the "all-in" costs like closing fees, legal expenses, and immediate renovations needed to make the property rent-ready.
  • Annual Net Cash Flow: This is your "take-home" pay. It's calculated by taking your total annual rent collected and subtracting all annual operating expenses (taxes, insurance, maintenance, and management).
  • Cash-on-Cash ROI: This metric tells you the percentage return based strictly on the cash you personally invested. Formula: (Annual Cash Flow / Total Cash Invested) x 100.
  • Cap Rate: The Capitalization Rate measures the property's natural rate of return without considering financing or mortgages. It helps compare the intrinsic value of properties in different markets.

Realistic Investment Example

Imagine you buy a condo for $250,000. You spend $5,000 on closing and $15,000 on new flooring and paint. Your total investment is $270,000.

If you rent it for $2,200 a month and your total expenses (taxes, insurance, and repairs) are $800 a month, your monthly profit is $1,400. That's $16,800 per year.

Your ROI would be 6.22% ($16,800 รท $270,000). In real estate, a "good" ROI is typically considered anything above 7-8%, though this varies by market and property type.

What to Include in Monthly Expenses

Beginner investors often underestimate expenses. To get an accurate ROI, you must include:

  • Property Taxes: Check local county records.
  • Insurance: Landlord-specific policies are usually 25% higher than standard homeowner policies.
  • Maintenance Reserve: Set aside 5-10% of rent for future repairs (roof, HVAC).
  • Vacancy Factor: Assume the property will be empty 1 month per year (8.3% vacancy rate).
  • HOA Fees: If applicable, these can significantly eat into profits.
function calculateRentalROI() { // Get Input Values var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var closingCosts = parseFloat(document.getElementById('closingCosts').value); var renoCosts = parseFloat(document.getElementById('renoCosts').value); var monthlyRent = parseFloat(document.getElementById('monthlyRent').value); var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value); // Validation if (isNaN(purchasePrice) || isNaN(closingCosts) || isNaN(renoCosts) || isNaN(monthlyRent) || isNaN(monthlyExpenses)) { alert("Please enter valid numbers in all fields."); return; } // Calculations var totalInvestment = purchasePrice + closingCosts + renoCosts; var annualRent = monthlyRent * 12; var annualExpenses = monthlyExpenses * 12; var annualCashFlow = annualRent – annualExpenses; var roi = 0; if (totalInvestment > 0) { roi = (annualCashFlow / totalInvestment) * 100; } var capRate = 0; if (purchasePrice > 0) { capRate = (annualCashFlow / purchasePrice) * 100; } // Display Results document.getElementById('resTotalInvest').innerHTML = '$' + totalInvestment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resAnnualCash').innerHTML = '$' + annualCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resROI').innerHTML = roi.toFixed(2) + '%'; document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%'; // Dynamic color coding for ROI var roiElement = document.getElementById('resROI'); if (roi < 4) { roiElement.style.color = "#d32f2f"; // Red } else if (roi < 8) { roiElement.style.color = "#f57c00"; // Orange } else { roiElement.style.color = "#2e7d32"; // Green } } // Run once on load window.onload = function() { calculateRentalROI(); };

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