Rental Property ROI & Cash Flow Calculator
Purchase Information
Loan Details
Rental Income & Expenses
Investment Analysis
Net Monthly Cash Flow:
Cash on Cash Return (CoC):
Cap Rate:
Net Operating Income (NOI) / Mo:
Total Monthly Expenses:
Monthly Mortgage Payment:
Total Cash Needed to Buy:
How to Analyze a Rental Property Investment
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 rigorously. This Rental Property ROI Calculator helps you determine the viability of a potential deal by breaking down cash flow, capitalization rate (Cap Rate), and Cash on Cash (CoC) return.
Understanding the Key Metrics
When evaluating a rental property, three metrics stand out as critical indicators of performance:
- Cash Flow: This is the net profit you pocket every month after all expenses (mortgage, taxes, insurance, repairs) are paid. Positive cash flow ensures the property pays for itself and provides passive income.
- Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment + closing costs + rehab). It is a superior metric to simple ROI because it accounts for leverage. A CoC return of 8-12% is generally considered healthy in many markets.
- Cap Rate (Capitalization Rate): Cap rate measures the property's natural rate of return assuming it was bought with all cash. It helps compare the profitability of different properties regardless of financing method. It is calculated as Net Operating Income / Purchase Price.
Hidden Expenses Investors Often Miss
New investors often overestimate cash flow by forgetting to account for "phantom" expenses. Our calculator includes fields for these crucial deductions:
- Vacancy Rate: Properties are rarely occupied 100% of the time. Setting aside 5-8% of rent ensures you are covered during turnover periods.
- Maintenance & CapEx: Roofs leak and water heaters break. Allocating a budget (often 1% of property value per year) for maintenance saves you from cash flow shock when repairs are needed.
- Property Management: Even if you self-manage now, calculating a 10% management fee ensures the deal still works if you decide to hire a professional later.
Using the 1% Rule
A quick rule of thumb used by many investors for initial screening is the "1% Rule". This rule suggests that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month. While not a hard rule, properties that meet this criteria often show stronger cash flow in the detailed analysis provided by the calculator above.