function calculateRentalROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var taxYear = parseFloat(document.getElementById('annualTaxes').value);
var insYear = parseFloat(document.getElementById('annualInsurance').value);
var hoaMonth = parseFloat(document.getElementById('hoaFees').value);
var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(years) || isNaN(rent)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 2. Loan Calculations
var downAmount = price * (downPercent / 100);
var loanAmount = price – downAmount;
var monthlyRate = rate / 100 / 12;
var numberOfPayments = years * 12;
// Mortgage P&I Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyPI = 0;
if (rate > 0) {
monthlyPI = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyPI = loanAmount / numberOfPayments;
}
// 3. Expense Calculations
var monthlyTax = taxYear / 12;
var monthlyIns = insYear / 12;
var vacancyCost = rent * (vacancyPercent / 100);
var totalMonthlyExpenses = monthlyPI + monthlyTax + monthlyIns + hoaMonth + vacancyCost;
// 4. Income & Returns
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var totalCashInvested = downAmount + closingCosts;
var noiMonthly = rent – (monthlyTax + monthlyIns + hoaMonth + vacancyCost);
var noiAnnual = noiMonthly * 12;
var cashOnCash = (annualCashFlow / totalCashInvested) * 100;
var capRate = (noiAnnual / price) * 100;
// 5. Update UI
// Helper for currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resTotalCash').innerText = formatter.format(totalCashInvested);
document.getElementById('resMortgage').innerText = formatter.format(monthlyPI);
document.getElementById('resTotalExpenses').innerText = formatter.format(totalMonthlyExpenses);
document.getElementById('resNOI').innerText = formatter.format(noiMonthly);
var cashFlowEl = document.getElementById('resMonthlyCashFlow');
cashFlowEl.innerText = formatter.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cashFlowEl.className = "result-value positive";
} else {
cashFlowEl.className = "result-value negative";
}
var cocEl = document.getElementById('resCashOnCash');
cocEl.innerText = cashOnCash.toFixed(2) + "%";
if(cashOnCash >= 0) {
cocEl.style.color = "#28a745";
} else {
cocEl.style.color = "#dc3545";
}
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
document.getElementById('resultBox').style.display = "block";
}
Understanding Rental Property Investment Metrics
Investing in real estate 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 meticulously. This Rental Property ROI Calculator helps you evaluate the potential profitability of an investment by looking at key metrics like Cash Flow, Cash on Cash Return, and Cap Rate.
What is Cash Flow?
Cash flow is the net amount of cash moving in and out of your investment each month. It is calculated by taking your total monthly rental income and subtracting all expenses, including the mortgage payment, property taxes, insurance, HOA fees, and vacancy reserves. Positive cash flow means the property is putting money in your pocket every month, while negative cash flow means you are paying out of pocket to hold the asset.
Cash on Cash Return vs. Cap Rate
Two of the most critical metrics for real estate investors are Cash on Cash Return and Cap Rate. While they both measure performance, they serve different purposes:
Cash on Cash Return (CoC ROI): This measures the annual return on the actual cash you invested (down payment + closing costs). It answers the question, "For every dollar I put in, how much am I getting back this year?" A good Cash on Cash return is typically considered to be anything above 8-12%, depending on the market.
Cap Rate (Capitalization Rate): This measures the rate of return on a real estate investment property based on the income that the property is expected to generate, excluding financing costs. It helps compare the intrinsic value of different properties regardless of how they are purchased (cash vs. loan).
The Importance of Vacancy and Maintenance Reserves
Many new investors make the mistake of calculating ROI based on 100% occupancy and zero repairs. In reality, tenants move out, and water heaters break. This calculator allows you to input a Vacancy Rate (typically 5-10%) and maintenance costs (included in monthly expenses) to give you a more realistic picture of your long-term returns.
Using the 1% Rule
A common "rule of thumb" for initial screening is the 1% Rule. It states that the monthly rent should be at least 1% of the purchase price. For example, a $300,000 home should rent for at least $3,000. While not a hard-and-fast rule for final purchasing decisions, it is a useful filter to quickly identify properties that are likely to have positive cash flow.