function calculateRentalROI() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('rpPurchasePrice').value) || 0;
var downPayment = parseFloat(document.getElementById('rpDownPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('rpInterestRate').value) || 0;
var loanTermYears = parseFloat(document.getElementById('rpLoanTerm').value) || 30;
var closingCosts = parseFloat(document.getElementById('rpClosingCosts').value) || 0;
var rehabCosts = parseFloat(document.getElementById('rpRehabCosts').value) || 0;
var monthlyRent = parseFloat(document.getElementById('rpMonthlyRent').value) || 0;
var annualTaxes = parseFloat(document.getElementById('rpAnnualTaxes').value) || 0;
var annualInsurance = parseFloat(document.getElementById('rpAnnualInsurance').value) || 0;
var monthlyHOA = parseFloat(document.getElementById('rpMonthlyHOA').value) || 0;
// 2. Calculate Mortgage
var loanAmount = price – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 3. Calculate Expenses
var monthlyTax = annualTaxes / 12;
var monthlyIns = annualInsurance / 12;
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + monthlyHOA;
// 4. Calculate Cash Flow
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate NOI (Net Operating Income)
// NOI = Annual Income – Annual Operating Expenses (Excluding Debt Service)
var annualOperatingExpenses = annualTaxes + annualInsurance + (monthlyHOA * 12);
var annualNOI = (monthlyRent * 12) – annualOperatingExpenses;
// 6. Calculate Metrics
var totalCashInvested = downPayment + closingCosts + rehabCosts;
var capRate = 0;
var cashOnCash = 0;
if (price > 0) {
// Cap Rate usually calculated on Purchase Price + Rehab, but standard is Purchase Price
capRate = (annualNOI / price) * 100;
}
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
// 7. Display Results
document.getElementById('resMortgage').innerText = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalExpenses').innerText = "$" + totalMonthlyExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerText = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
cashFlowEl.style.color = monthlyCashFlow >= 0 ? "#38a169" : "#e53e3e";
document.getElementById('resNOI').innerText = "$" + annualNOI.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cashOnCash.toFixed(2) + "%";
cocEl.style.color = cashOnCash >= 0 ? "#38a169" : "#e53e3e";
// Show result box
document.getElementById('rpResults').style.display = 'block';
}
Understanding Rental Property ROI
Investing in real estate is a powerful way to build wealth, but accurate calculations are the bedrock of a successful portfolio. Whether you are analyzing a single-family home or a multi-unit complex, understanding your numbers ensures you don't buy into a liability. This Rental Property ROI Calculator helps investors determine the viability of a potential deal by analyzing cash flow, Cap Rate, and Cash-on-Cash Return.
Key Metrics Explained
1. Monthly Cash Flow
Cash flow is the net profit you pocket every month after all expenses are paid. It is calculated as Total Rental Income - Total Expenses. Positive cash flow means the property pays for itself and generates income, while negative cash flow means you are losing money every month to hold the asset.
2. Cap Rate (Capitalization Rate)
The Cap Rate measures the natural rate of return of a property assuming you paid cash for it (no loan). It is calculated as Net Operating Income (NOI) / Purchase Price. This metric allows you to compare properties apples-to-apples, regardless of how they are financed. A higher Cap Rate generally indicates a better return, though often comes with higher risk.
3. Cash-on-Cash ROI
This is arguably the most important metric for leveraged investors. It calculates the annual return on the actual cash you invested (down payment + closing costs + rehab). It answers the question: "For every dollar I put into this deal, how much am I getting back this year?" A Cash-on-Cash return of 8-12% is often considered a strong target for buy-and-hold investors.
How to Use This Calculator
Purchase Price & Down Payment: Enter the agreed price and your cash contribution. The calculator automatically derives the loan amount.
Loan Terms: Accurate interest rates are crucial. Even a 1% difference can significantly impact your monthly cash flow.
Operating Expenses: Be realistic. Include property taxes, insurance, and HOA fees. Don't forget to account for maintenance; while not a fixed monthly bill, you should budget for repairs.
Rehab Costs: If the property is a fixer-upper, include your renovation budget to see the true return on your total investment.
Use this tool to screen properties quickly. If the numbers don't make sense here, they won't make sense at the closing table.