Investing in real estate is a powerful way to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To be a successful investor, you must analyze the numbers. Our Rental Property ROI Calculator helps you evaluate the potential profitability of a real estate deal by calculating key metrics like Cash Flow, Cap Rate, and Cash-on-Cash Return.
How to Interpret the Results
Monthly Cash Flow: This is the profit you pocket every month after all expenses (mortgage, taxes, insurance, maintenance) are paid. A positive cash flow is essential for long-term sustainability. Ideally, you want a buffer to handle unexpected repairs.
Cap Rate (Capitalization Rate): This metric calculates the rate of return on a real estate investment property based on the income that the property is expected to generate. It is calculated by dividing the Net Operating Income (NOI) by the current market value (Purchase Price). It helps compare the profitability of different properties regardless of how they are financed.
Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (Down Payment + Closing Costs + Rehab Costs). It is often considered the most important metric for investors using leverage (loans), as it shows how hard your specific dollars are working for you.
Inputs Explained
Vacancy & Maintenance: It is crucial to set aside a percentage of your monthly rent (typically 5-10% each) for times when the property is empty or requires repairs. Ignoring this often leads to negative cash flow surprises down the road.
NOI (Net Operating Income): This represents the total revenue of the property minus all necessary operating expenses. Note that NOI does not include mortgage payments (principal and interest), as those are financing costs, not operating costs.
Why Use a Rental ROI Calculator?
Emotional decisions are the enemy of real estate investing. By using a calculator, you strip away the emotions and look strictly at the data. Whether you are analyzing a single-family home, a duplex, or a condo, knowing your numbers ensures you only buy assets that align with your financial goals.
function calculateRentalROI() {
// 1. Get Input Values
var propPrice = parseFloat(document.getElementById('propPrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var repairCosts = parseFloat(document.getElementById('repairCosts').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var monthlyHOA = parseFloat(document.getElementById('monthlyHOA').value);
var annualTax = parseFloat(document.getElementById('annualTax').value);
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value);
var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value);
// 2. Validate Inputs
if (isNaN(propPrice) || isNaN(downPayment) || isNaN(interestRate) || isNaN(monthlyRent)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 3. Loan Calculations
var loanAmount = propPrice – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyMortgage = 0;
if (loanAmount > 0) {
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
}
// 4. Expense Calculations
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var maintenanceCost = monthlyRent * (maintenanceRate / 100);
// Total Operating Expenses (Excluding Mortgage)
var totalMonthlyOperatingExpenses = monthlyHOA + monthlyTax + monthlyInsurance + maintenanceCost;
// Total Expenses (Including Mortgage)
var totalMonthlyExpenses = totalMonthlyOperatingExpenses + monthlyMortgage;
// 5. Income & Return Calculations
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI) = Annual Rent – Annual Operating Expenses (No Mortgage)
var annualNOI = (monthlyRent * 12) – (totalMonthlyOperatingExpenses * 12);
// Total Cash Invested
var totalCashInvested = downPayment + closingCosts + repairCosts;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate = Annual NOI / Property Price
var capRate = 0;
if (propPrice > 0) {
capRate = (annualNOI / propPrice) * 100;
}
// 6. Display Results
document.getElementById('resMortgage').innerText = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resExpenses').innerText = "$" + totalMonthlyExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerText = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
cashFlowEl.style.color = monthlyCashFlow >= 0 ? "#27ae60" : "#c0392b"; // Green if positive, Red if negative
document.getElementById('resNOI').innerText = "$" + annualNOI.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cocReturn.toFixed(2) + "%";
cocEl.style.color = cocReturn >= 0 ? "#27ae60" : "#c0392b";
// Show result section
document.getElementById('roiResults').style.display = "block";
}