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Rental Property ROI & Cash Flow Calculator

Property Details

Income & Expenses

Investment Analysis Results

Monthly Cash Flow $0
Cash-on-Cash Return 0%
Cap Rate 0%
Total Monthly Expenses $0

Mortgage P&I:

Net Operating Income (NOI):

function calculateRentalROI() { var price = parseFloat(document.getElementById('purchasePrice').value); var dpPercent = parseFloat(document.getElementById('downPaymentPercent').value); var rate = parseFloat(document.getElementById('interestRate').value) / 100 / 12; var term = parseFloat(document.getElementById('loanTerm').value) * 12; var rent = parseFloat(document.getElementById('monthlyRent').value); var taxes = parseFloat(document.getElementById('annualTaxes').value) / 12; var insurance = parseFloat(document.getElementById('annualInsurance').value) / 12; var mgmt = (parseFloat(document.getElementById('mgmtFee').value) / 100) * rent; if (isNaN(price) || isNaN(rent)) { alert("Please enter valid numbers for Price and Rent."); return; } var downPaymentAmount = price * (dpPercent / 100); var loanAmount = price – downPaymentAmount; // Mortgage Calculation (P&I) var mortgage = 0; if (rate > 0) { mortgage = loanAmount * (rate * Math.pow(1 + rate, term)) / (Math.pow(1 + rate, term) – 1); } else { mortgage = loanAmount / term; } // Operating Expenses (Excluding Mortgage) var monthlyOpEx = taxes + insurance + mgmt + (rent * 0.05); // 5% for repairs/capex var totalMonthlyExp = mortgage + monthlyOpEx; var monthlyCashFlow = rent – totalMonthlyExp; var annualCashFlow = monthlyCashFlow * 12; // ROI Metrics var cashOnCash = (annualCashFlow / downPaymentAmount) * 100; var annualNOI = (rent – monthlyOpEx) * 12; var capRate = (annualNOI / price) * 100; // Display results document.getElementById('results-area').style.display = 'block'; document.getElementById('resCashFlow').innerHTML = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCoC').innerHTML = cashOnCash.toFixed(2) + '%'; document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%'; document.getElementById('resTotalExp').innerHTML = '$' + totalMonthlyExp.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resMortgage').innerHTML = '$' + mortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resNOI').innerHTML = '$' + annualNOI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + ' (Annual)'; }

How to Calculate Rental Property ROI: A Comprehensive Guide

Investing in real estate is one of the most proven ways to build long-term wealth. However, the difference between a "good deal" and a "money pit" lies in the math. To ensure your investment yields a profit, you must accurately calculate your Return on Investment (ROI).

Understanding Key Real Estate Metrics

When using our rental property calculator, you'll encounter three critical metrics that every landlord should know:

  • Cash-on-Cash Return: This measures the annual cash flow relative to the actual cash you invested (your down payment and closing costs). It is the most accurate reflection of how hard your "out-of-pocket" money is working for you.
  • Cap Rate (Capitalization Rate): This evaluates a property's profitability regardless of the financing used. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. It is best used for comparing similar properties in the same market.
  • Net Operating Income (NOI): This is your total annual income minus all operating expenses (taxes, insurance, maintenance, management), but before mortgage payments.

The Importance of Estimating Expenses

New investors often make the mistake of only accounting for the mortgage, taxes, and insurance. To get a realistic ROI, you must "buffer" for hidden costs:

  • Vacancy Rate: Properties don't stay 100% occupied. Smart investors budget 5-8% for vacancy.
  • Maintenance and CapEx: Roofs leak and water heaters break. Budgeting 5-10% of the rent for future repairs is essential.
  • Property Management: Even if you manage it yourself now, you should budget for a manager (usually 8-12%) so the deal still works if you decide to go hands-off later.

Real-World ROI Example

Imagine you purchase a single-family home for $300,000 with a 20% down payment ($60,000). If the monthly rent is $2,500 and your total monthly expenses (including mortgage, tax, and insurance) are $2,100, your monthly cash flow is $400.

Your annual cash flow would be $4,800. To find your Cash-on-Cash return:
$4,800 (Annual Cash Flow) / $60,000 (Invested Cash) = 8.0% ROI.

Frequently Asked Questions

What is a good ROI for a rental property?

Typically, investors look for a Cash-on-Cash return of 8-12% and a Cap Rate between 5-8%, depending on the risk and location of the property.

How can I increase my ROI?

You can improve ROI by increasing rent through minor renovations, decreasing vacancy through better tenant screening, or refinancing to a lower interest rate to reduce monthly mortgage obligations.

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