ROI Rental Property Calculator

How rental property ROI is calculated

Two of the most common metrics investors use to evaluate rental property returns are cap rate (which ignores financing) and cash-on-cash return (which accounts for how the deal is financed).

The formulas

Net Operating Income (NOI) is annual rent minus operating expenses, before mortgage payments. Cash invested is your down payment plus closing costs. Annual cash flow subtracts the mortgage payment too, showing what actually lands in your pocket.

How to use this calculator

1. Enter the purchase price and how much you're putting down.
2. Enter closing costs (inspection, title, lender fees, etc.).
3. Enter expected monthly rent and monthly operating expenses (property tax, insurance, maintenance, management, vacancy allowance) — not including the mortgage.
4. Enter your monthly mortgage payment (principal + interest) if financed, or 0 if paying cash.

Frequently asked questions

What's a good cap rate for a rental property? It varies heavily by market — many investors look for 5-10%, with higher cap rates often reflecting either a better deal or a riskier/less desirable market.

What's the difference between cap rate and cash-on-cash return? Cap rate ignores how the property is financed and shows the return based purely on price and income; cash-on-cash return factors in your mortgage payment and only the cash you actually put in.

Should I include vacancy in my expense estimate? Yes — most investors budget 5-10% of annual rent for vacancy and turnover costs even in strong markets, since no rental stays occupied 100% of the time.

Does this account for appreciation or eventual sale proceeds? No — this calculator focuses on ongoing operating returns (cap rate and cash flow), not appreciation or the profit from eventually selling the property; use an IRR calculator to factor in a future sale.