Rental Property ROI Calculator
Investment Analysis Summary
Initial Cash Outlay (Down Payment):
$0.00
Monthly Mortgage Payment (P&I):
$0.00
Total Monthly Operating Expenses:
$0.00
Net Monthly Cash Flow:
$0.00
Cash on Cash ROI (Annual):
0.00%
Cap Rate:
0.00%
Understanding Your Rental Property ROI
Investing in real estate is one of the most proven ways to build long-term wealth, but the numbers must make sense before you sign the closing papers. Our Rental Property ROI Calculator is designed to help investors determine the viability of a deal by looking at the Cash-on-Cash Return and Net Cash Flow.
Key Metrics Explained
- Cash on Cash Return: This is the ratio of annual before-tax cash flow to the total amount of cash invested. It tells you exactly how much your money is "earning" compared to keeping it in a savings account.
- Cap Rate (Capitalization Rate): This evaluates the property's yield independent of financing. It is calculated by dividing the Net Operating Income (NOI) by the purchase price.
- Net Cash Flow: This is the "profit" left in your pocket every month after every single expense—mortgage, taxes, insurance, and maintenance—has been paid.
Pro Tip: Always factor in a "Maintenance and Vacancy" buffer. Even the best properties will have months where they sit empty or require a new water heater. Most seasoned investors use 10% to 15% of the gross rent as a safety margin.
Example Calculation
Imagine you buy a property for $250,000 with a 20% down payment ($50,000). If your monthly rent is $2,200 and your total expenses (mortgage, taxes, insurance, and maintenance) equal $1,800, your monthly cash flow is $400.
To find your Cash-on-Cash ROI:
($400 Monthly Flow x 12 Months) / $50,000 Down Payment = 9.6% ROI.
Why ROI Matters
Without calculating ROI, you might find yourself "house rich but cash poor." A property might appreciate in value over 20 years, but if it loses $200 every month in negative cash flow, it creates a drain on your current lifestyle. Use this calculator to ensure your investment works for you, rather than you working for your investment.