Ready to run the numbers?
Open the Rental ROI Calculator →Inputs
- Purchase Price. Full contract price, before closing costs.
- Down Payment. Cash invested at close — usually 20–25% on conventional investment loans.
- Interest Rate & Term. Loan rate and amortization period — drive the monthly debt service.
- Monthly Rent. Realistic market rent, not aspirational.
- Operating Expenses. Taxes, insurance, management, maintenance, vacancy, and capex reserves.
Outputs
- Monthly Cash Flow. What hits your account each month after every expense and the mortgage.
- Cash-on-Cash Return. Annual cash flow divided by total cash invested.
- Cap Rate. NOI ÷ purchase price — unleveraged yield for apples-to-apples comparison.
- Investment Score. Our 0–100 deal grade combining cash flow, returns, risk, and market context.
Formulas
- Cash Flow
Rent − Operating Expenses − Debt Service
- Cash-on-Cash
(Annual Cash Flow ÷ Cash Invested) × 100%
- Cap Rate
NOI ÷ Purchase Price
Best Practices
- Underwrite vacancy at 8% even in tight markets — your worst year defines you.
- Always reserve 5–10% of rent for capex on stabilized properties.
- Use real management fees (8–10%) even if self-managing — your time has value.
Common Pitfalls
- Ignoring closing costs in total cash invested inflates CoC return.
- Using gross rent instead of effective income after vacancy.
- Forgetting property tax reassessment after purchase.
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Frequently Asked Questions
- What's a good cash-on-cash return on a rental?
- 8–12% is strong on a stabilized property; below 6% usually only makes sense in high-appreciation markets.
- Should I include appreciation in ROI?
- Cash flow and CoC return are real today; appreciation is a forecast. Underwrite on cash, treat appreciation as upside.
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