body {
font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-container {
background-color: #f9f9f9;
border: 1px solid #ddd;
border-radius: 8px;
padding: 25px;
box-shadow: 0 4px 6px rgba(0,0,0,0.1);
margin-bottom: 40px;
}
.calc-header {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.input-grid {
display: grid;
grid-template-columns: 1fr 1fr;
gap: 20px;
}
@media (max-width: 600px) {
.input-grid {
grid-template-columns: 1fr;
}
}
.form-group {
margin-bottom: 15px;
}
label {
display: block;
margin-bottom: 5px;
font-weight: 600;
font-size: 0.9em;
}
input[type="number"] {
width: 100%;
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box; /* Fix padding issue */
}
.btn-calc {
width: 100%;
background-color: #27ae60;
color: white;
padding: 15px;
border: none;
border-radius: 4px;
font-size: 1.1em;
cursor: pointer;
margin-top: 20px;
font-weight: bold;
transition: background-color 0.3s;
}
.btn-calc:hover {
background-color: #219150;
}
.results-section {
margin-top: 30px;
padding-top: 20px;
border-top: 2px solid #eee;
display: none;
}
.result-card {
background: #fff;
padding: 15px;
border-left: 5px solid #27ae60;
margin-bottom: 10px;
box-shadow: 0 2px 4px rgba(0,0,0,0.05);
}
.result-label {
font-size: 0.9em;
color: #7f8c8d;
text-transform: uppercase;
letter-spacing: 1px;
}
.result-value {
font-size: 1.4em;
font-weight: bold;
color: #2c3e50;
}
.article-content {
background: #fff;
padding: 20px;
}
h2 {
color: #2c3e50;
border-bottom: 2px solid #27ae60;
padding-bottom: 10px;
margin-top: 30px;
}
h3 {
color: #2c3e50;
margin-top: 25px;
}
ul {
margin-bottom: 20px;
}
li {
margin-bottom: 8px;
}
.highlight-box {
background-color: #e8f6f3;
padding: 15px;
border-radius: 5px;
border: 1px solid #a2d9ce;
margin: 20px 0;
}
Understanding Real Estate Investment Metrics
Investing in rental property 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, investors must analyze the numbers rigorously. This Rental Property ROI Calculator helps you determine the viability of a potential deal by breaking down the three most critical metrics: Cash Flow, Cap Rate, and Cash on Cash Return.
1. Monthly Cash Flow
Cash flow is the profit you take home each month after all operating expenses and debt service (mortgage payments) are paid. Positive cash flow is essential for long-term sustainability.
Formula: Monthly Rent – (Mortgage + Taxes + Insurance + Fees + Repairs) = Cash Flow
If your calculation results in negative cash flow, the property will cost you money out-of-pocket every month to hold, which is a high-risk strategy usually reserved for markets with extreme appreciation potential.
2. Cash on Cash Return (CoC)
Cash on Cash Return measures the annual return on the actual cash you invested in the deal, rather than the total purchase price. This is crucial for leveraged investments (where you use a mortgage).
- Why it matters: It compares real estate to other investments like stocks or bonds.
- A good benchmark: Many investors aim for a CoC return of 8-12%, though this varies by market strategy.
3. Capitalization Rate (Cap Rate)
The Cap Rate indicates the rate of return on a real estate investment property based on the income that the property is expected to generate. Unlike CoC, Cap Rate excludes financing costs (mortgage payments).
It effectively helps you answer: "If I paid all cash for this house, what would my return be?" It is useful for comparing the intrinsic value of properties regardless of how they are financed.
Example Calculation
Let's look at a realistic scenario for a single-family rental:
- Purchase Price: $200,000
- Down Payment (20%): $40,000
- Rehab/Closing Costs: $5,000
- Monthly Rent: $1,800
If your total monthly expenses (mortgage, tax, insurance, maintenance) come to $1,400, your Monthly Cash Flow is $400. That is $4,800 per year.
With a total cash investment of $45,000 ($40k down + $5k costs), your Cash on Cash Return would be ($4,800 / $45,000) = 10.66%. This would generally be considered a solid investment.
function calculateROI() {
// 1. Get Inputs using var
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var annualTax = parseFloat(document.getElementById('annualTax').value);
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value);
var monthlyHOA = parseFloat(document.getElementById('monthlyHOA').value);
var annualMaintenance = parseFloat(document.getElementById('annualMaintenance').value);
// 2. Validate Inputs
if (isNaN(purchasePrice) || isNaN(downPayment) || isNaN(monthlyRent)) {
alert("Please enter valid numbers for at least the Purchase Price, Down Payment, and Monthly Rent.");
return;
}
// Default missing optional values to 0
if (isNaN(closingCosts)) closingCosts = 0;
if (isNaN(annualTax)) annualTax = 0;
if (isNaN(annualInsurance)) annualInsurance = 0;
if (isNaN(monthlyHOA)) monthlyHOA = 0;
if (isNaN(annualMaintenance)) annualMaintenance = 0;
if (isNaN(interestRate)) interestRate = 0;
if (isNaN(loanTerm)) loanTerm = 30;
// 3. Perform Calculations
// A. Mortgage Calculation
var loanAmount = purchasePrice – downPayment;
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0) {
var r = interestRate / 100 / 12; // Monthly interest rate
var n = loanTerm * 12; // Total payments
monthlyMortgage = (loanAmount * r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1);
}
// B. Income and Expenses
var grossAnnualIncome = monthlyRent * 12;
var totalAnnualOperatingExpenses = annualTax + annualInsurance + (monthlyHOA * 12) + annualMaintenance;
// Net Operating Income (NOI)
var noi = grossAnnualIncome – totalAnnualOperatingExpenses;
// C. Cash Flow
var annualDebtService = monthlyMortgage * 12;
var annualCashFlow = noi – annualDebtService;
var monthlyCashFlow = annualCashFlow / 12;
// D. Investment Metrics
var totalCashInvested = downPayment + closingCosts;
// Cash on Cash Return
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate
var capRate = 0;
if (purchasePrice > 0) {
capRate = (noi / purchasePrice) * 100;
}
// 4. Update UI
document.getElementById('resCashFlow').innerHTML = "$" + monthlyCashFlow.toFixed(2);
document.getElementById('resCoc').innerHTML = cocReturn.toFixed(2) + "%";
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
document.getElementById('resNOI').innerHTML = "$" + noi.toFixed(2);
document.getElementById('resMortgage').innerHTML = "$" + monthlyMortgage.toFixed(2);
document.getElementById('resInvested').innerHTML = "$" + totalCashInvested.toFixed(2);
// Show results
document.getElementById('results').style.display = 'block';
}