Rental Property ROI Calculator
Analyze cap rate, cash-on-cash return, monthly cash flow, and long-term projections.
Property & Financing
Income & Expenses
Monthly Cash Flow
$-98
Cap Rate
6.0%
Cash-on-Cash
-1.7%
Annual NOI
$17,980
Financial Summary
Multi-Year Projection
| Year | Cash Flow | Property Value | Equity | Total Return |
|---|---|---|---|---|
| 1 | $-1,181 | $309,000 | $71,438 | $1,257 |
| 2 | $-892 | $318,270 | $83,322 | $12,538 |
| 3 | $-600 | $327,818 | $95,673 | $24,874 |
| 5 | $-4 | $347,782 | $121,866 | $52,844 |
| 10 | $1,548 | $403,175 | $197,225 | $143,708 |
| 15 | $3,192 | $467,390 | $289,745 | $268,631 |
| 20 | $4,926 | $541,833 | $404,313 | $433,838 |
Disclaimer
This calculator provides estimates for informational purposes only. Actual returns depend on market conditions, property management, and unforeseen expenses. Consult a real estate professional before investing.
Key Metrics for Rental Property Investors
Before buying a rental property, you need to understand several return metrics. Each tells a different part of the story — a property can have a great cap rate but negative cash flow if the mortgage payment is too high.
| Metric | Formula | Good Range |
|---|---|---|
| Cap Rate | NOI ÷ Purchase Price | 5-10% |
| Cash-on-Cash | Annual Cash Flow ÷ Cash Invested | 8-12% |
| ROI (Total) | (Equity + Cash Flow) ÷ Total Investment | 15%+ |
| GRM | Price ÷ Gross Annual Rent | 4-8 |
The 1% Rule and 50% Rule
The 1% rule says monthly rent should be at least 1% of the purchase price (a $200,000 property should rent for $2,000/month). The 50% rule estimates that operating expenses will consume about 50% of gross rent, excluding mortgage payments. These are quick screening tools, not guarantees.
Operating Expenses to Budget For
New investors often underestimate expenses. Budget for property taxes (1-2% of value), insurance ($800-$2,000/year), maintenance (1% of value/year), vacancy (5-10% of gross rent), property management (8-10% of rent), and a capital expenditure reserve for major repairs like roofs and HVAC systems.
IRS — Rental Income and Expenses→Frequently Asked Questions
What is a good cap rate?
Cap rates vary by market and property type. In major metros (NYC, SF, LA), 3-5% is common. In secondary markets and the Midwest, 6-10% is achievable. Higher cap rates generally mean higher risk or less desirable locations.
Should I include appreciation in ROI?
Appreciation is speculative — it's wise to analyze the deal based on cash flow alone. If the property cash-flows without relying on appreciation, any future price increase is a bonus.
Also check our Rental Income Calculator or Home Affordability Calculator.