Rental Property ROI Calculator
Calculate cash-on-cash return, cap rate, and cash flow for any rental property.
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This calculator helps you evaluate any rental property investment by calculating key return metrics. Here is how to use it:
- Enter the purchase price. This is the total price of the property you are considering. The default is $250,000.
- Set your down payment and closing costs. These two amounts represent your total cash invested upfront. The calculator uses these to determine your cash-on-cash return.
- Enter the expected monthly rent. Use comparable rents in the area for an accurate estimate. If you are unsure, check listings on Zillow or Rentometer for the neighborhood.
- Set a vacancy rate. Most investors use 5-10%. This accounts for months when the property sits empty between tenants or during turnover.
- Enter monthly operating expenses. Include property taxes, insurance, maintenance, property management fees, HOA dues, and repairs. A common rule of thumb is 40-50% of gross rent for total expenses excluding mortgage.
- Set your loan terms. Enter the interest rate and loan term. The calculator uses the standard amortization formula to compute your monthly mortgage payment.
Results update instantly as you type. Use the Share button to send a pre-filled link, or Copy to grab the result.
About Rental Property ROI
Rental property ROI measures how well a property performs as an investment. This calculator focuses on two key metrics: cash-on-cash return and cap rate. Cash-on-cash return tells you how much cash income you earn relative to the cash you invested (down payment plus closing costs). Cap rate measures the property's return independent of financing, making it useful for comparing properties regardless of loan terms.
A positive monthly cash flow means the property generates income after all expenses and the mortgage payment. A negative cash flow means you are paying out of pocket each month to hold the property, which may still be worthwhile if you are banking on appreciation or tax benefits.
All calculations run entirely in your browser. We never see or store your financial data.
Frequently Asked Questions
What is cash-on-cash return?
Cash-on-cash return measures the annual pre-tax cash flow relative to the total cash you invested. If you put $57,500 into a property (down payment plus closing costs) and it generates $5,000 in annual cash flow, your cash-on-cash return is 8.7%. This metric focuses specifically on the cash you actually invested, not the total property value.
What is a good cap rate for rental properties?
Cap rates vary widely by market and property type. In major metro areas, cap rates of 4-6% are common. In smaller markets or higher-risk areas, 8-12% is typical. A higher cap rate generally means higher potential returns but often comes with higher risk, more management effort, or a less desirable location. Compare cap rates for similar properties in the same market to evaluate a deal.
What expenses should I include in operating expenses?
Operating expenses typically include property taxes, property insurance, maintenance and repairs, property management fees (usually 8-10% of rent), HOA dues if applicable, landscaping, pest control, and a reserve for capital expenditures like roof or HVAC replacement. Do not include the mortgage payment here, as the calculator accounts for that separately.
What vacancy rate should I use?
A 5% vacancy rate means about 2-3 weeks of vacancy per year, which is reasonable in strong rental markets. In less desirable areas or for higher-end properties that take longer to fill, 8-10% is more realistic. Check local vacancy data from the Census Bureau or local property management companies for your specific market. Being conservative here protects you from overestimating returns.