function calculateRentalROI() {
// Get Inputs
var price = parseFloat(document.getElementById('rp_price').value) || 0;
var downPercent = parseFloat(document.getElementById('rp_down').value) || 0;
var closingCosts = parseFloat(document.getElementById('rp_closing').value) || 0;
var interestRate = parseFloat(document.getElementById('rp_interest').value) || 0;
var termYears = parseFloat(document.getElementById('rp_term').value) || 0;
var rent = parseFloat(document.getElementById('rp_rent').value) || 0;
var taxYear = parseFloat(document.getElementById('rp_tax').value) || 0;
var insuranceYear = parseFloat(document.getElementById('rp_insurance').value) || 0;
var hoaMonth = parseFloat(document.getElementById('rp_hoa').value) || 0;
var repairPercent = parseFloat(document.getElementById('rp_repair').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('rp_vacancy').value) || 0;
var capexPercent = parseFloat(document.getElementById('rp_capex').value) || 0;
var mgmtPercent = parseFloat(document.getElementById('rp_management').value) || 0;
// Calculate Loan Details
var downPaymentAmt = price * (downPercent / 100);
var loanAmount = price – downPaymentAmt;
var totalCashInvested = downPaymentAmt + closingCosts;
// Mortgage Calculation (P&I)
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
var mortgagePayment = 0;
if (interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
mortgagePayment = loanAmount / numberOfPayments;
}
// Monthly Operating Expenses
var taxMonth = taxYear / 12;
var insuranceMonth = insuranceYear / 12;
var repairMonth = rent * (repairPercent / 100);
var vacancyMonth = rent * (vacancyPercent / 100);
var capexMonth = rent * (capexPercent / 100);
var mgmtMonth = rent * (mgmtPercent / 100);
var totalOperatingExpenses = taxMonth + insuranceMonth + hoaMonth + repairMonth + vacancyMonth + capexMonth + mgmtMonth;
var totalMonthlyExpenses = mortgagePayment + totalOperatingExpenses;
// Metrics
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var monthlyNOI = rent – totalOperatingExpenses; // Net Operating Income excludes Mortgage
var annualNOI = monthlyNOI * 12;
var capRate = (price > 0) ? (annualNOI / price) * 100 : 0;
var cashOnCash = (totalCashInvested > 0) ? (annualCashFlow / totalCashInvested) * 100 : 0;
// Update DOM
document.getElementById('res_mortgage').innerText = '$' + mortgagePayment.toFixed(2);
document.getElementById('res_expenses').innerText = '$' + totalMonthlyExpenses.toFixed(2);
document.getElementById('res_noi').innerText = '$' + monthlyNOI.toFixed(2);
document.getElementById('res_invested').innerText = '$' + totalCashInvested.toFixed(2);
var cashFlowEl = document.getElementById('res_cashflow');
cashFlowEl.innerText = '$' + monthlyCashFlow.toFixed(2);
if (monthlyCashFlow >= 0) {
cashFlowEl.className = "rp-result-value rp-highlight";
} else {
cashFlowEl.className = "rp-result-value rp-highlight-neg";
}
document.getElementById('res_coc').innerText = cashOnCash.toFixed(2) + '%';
document.getElementById('res_cap').innerText = capRate.toFixed(2) + '%';
// Show results
document.getElementById('rp_results_area').style.display = 'block';
}
Understanding Your Rental Property ROI
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To ensure a successful investment, you must analyze the numbers thoroughly using a dedicated Rental Property Cash Flow Calculator. This tool helps investors forecast the potential performance of a property by factoring in income, operating expenses, and financing costs.
What is Cash Flow?
Monthly Cash Flow is the profit you take home after all expenses are paid. It is calculated by taking your total monthly rental income and subtracting all outflows, including the mortgage payment, property taxes, insurance, and operating costs. Positive cash flow means the asset is paying for itself and providing you with passive income, while negative cash flow implies you are losing money every month to hold the asset.
Cash on Cash Return vs. Cap Rate
Two critical metrics in real estate analysis are Cash on Cash Return (CoC) and Cap Rate. Our calculator breaks down both:
Cash on Cash Return: This measures the annual return on the actual cash you invested (down payment + closing costs). It is crucial for understanding the efficiency of your capital. A CoC return of 8-12% is often considered a solid benchmark for rental properties.
Cap Rate (Capitalization Rate): This measures the property's natural rate of return assuming it was bought with all cash. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. Cap Rate allows you to compare the profitability of different properties regardless of how they are financed.
Why You Must Include "Hidden" Expenses
Many novice investors fail because they only calculate the mortgage, tax, and insurance. However, true cash flow analysis requires factoring in:
Vacancy Rates: Your property won't be rented 100% of the time. Setting aside 5-8% for vacancy ensures you have a buffer during turnover.
Maintenance & CapEx: Roofs leak and toilets break. Allocating a percentage (usually 5-10% each) for routine repairs and Capital Expenditures (CapEx) like HVAC replacement is vital for long-term accuracy.
Management Fees: Even if you self-manage now, calculating a management fee (typically 8-10%) helps you understand if the deal still works if you decide to hire a property manager later.
Use the calculator above to adjust these variables and stress-test your investment deal before making an offer.