function calculateRentalROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var vacancy = parseFloat(document.getElementById('vacancyRate').value);
var tax = parseFloat(document.getElementById('propertyTax').value);
var insurance = parseFloat(document.getElementById('insurance').value);
var maintPercent = parseFloat(document.getElementById('maintenanceCost').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
// Validation
if (isNaN(price) || isNaN(rent) || isNaN(interestRate) || isNaN(loanTerm)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
// 2. Initial Cash Calculation
var downPaymentAmount = price * (downPercent / 100);
var totalCashNeeded = downPaymentAmount + closingCosts;
// 3. Mortgage Calculation
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (monthlyRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
monthlyMortgage = loanAmount / totalPayments;
}
// 4. Operating Expenses Calculation (Monthly)
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var monthlyMaint = (price * (maintPercent / 100)) / 12;
var monthlyVacancyLoss = rent * (vacancy / 100);
// Total Operating Expenses (excluding mortgage)
var totalMonthlyOpEx = monthlyTax + monthlyIns + monthlyMaint + monthlyVacancyLoss;
// 5. Income Metrics
var netOperatingIncome = rent – totalMonthlyOpEx; // NOI
var monthlyCashFlow = netOperatingIncome – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// 6. ROI Metrics
var cashOnCash = 0;
if (totalCashNeeded > 0) {
cashOnCash = (annualCashFlow / totalCashNeeded) * 100;
}
var annualNOI = netOperatingIncome * 12;
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 7. Display Results
var resultDiv = document.getElementById('resultsArea');
resultDiv.style.display = 'block';
document.getElementById('resCashNeeded').innerHTML = formatMoney(totalCashNeeded);
document.getElementById('resMortgage').innerHTML = formatMoney(monthlyMortgage);
document.getElementById('resExpenses').innerHTML = formatMoney(totalMonthlyOpEx + monthlyMortgage);
document.getElementById('resNOI').innerHTML = formatMoney(netOperatingIncome);
var cfElem = document.getElementById('resCashFlow');
cfElem.innerHTML = formatMoney(monthlyCashFlow);
if (monthlyCashFlow >= 0) {
cfElem.className = "rpc-result-value rpc-highlight";
} else {
cfElem.className = "rpc-result-value rpc-negative";
}
var cocElem = document.getElementById('resCoC');
cocElem.innerHTML = cashOnCash.toFixed(2) + "%";
if (cashOnCash >= 0) {
cocElem.className = "rpc-result-value rpc-highlight";
} else {
cocElem.className = "rpc-result-value rpc-negative";
}
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
}
function formatMoney(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
Understanding Your Rental Property Profitability
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, you must understand the numbers behind the deal. This Rental Property Profitability Calculator helps investors analyze potential deals by breaking down income, expenses, and return on investment (ROI).
Key Metrics Explained
1. Cash Flow
Cash flow is the net amount of money moving in or out of your business monthly. In real estate, it is calculated as Total Rent Collected – Total Expenses (Mortgage + Operating Costs). Positive cash flow means the property pays for itself and generates income. Negative cash flow means you are losing money every month just to hold the asset.
2. Cash on Cash Return (CoC ROI)
This is arguably the most important metric for rental investors. It measures the annual return you make on the money you actually invested (down payment + closing costs), rather than the total value of the property.
Formula: Annual Pre-Tax Cash Flow / Total Cash Invested.
For example, if you invest $50,000 cash to buy a property and it generates $5,000 in net cash flow per year, your CoC return is 10%. This allows you to compare real estate returns against stocks or bonds.
3. Cap Rate (Capitalization Rate)
Cap rate measures a property's natural rate of return assuming it was bought with all cash (no loan). It is calculated by dividing the Net Operating Income (NOI) by the Purchase Price. It helps you judge the quality of the deal and the market risk without the influence of financing terms.
Common Expenses to Watch Out For
Many new investors underestimate expenses, leading to "negative cash flow" surprises. When using the calculator, ensure you account for:
Vacancy Rates: You won't have a tenant 12 months a year. A 5-8% vacancy allowance is standard.
Maintenance & Repairs: Roofs leak and toilets break. Budgeting 1% of the property value annually is a safe rule of thumb.
Property Taxes & Insurance: These can fluctuate and significantly eat into profits.
How to Use This Calculator
Enter the purchase details and loan terms in the top section. Be realistic with your rental estimates and expense projections. The calculator will instantly output your monthly cash flow and your annual percentage returns, helping you decide if the property is a "Go" or "No-Go".