Property Investment ROI Calculator
How the calculator evaluates a rental
This rental property ROI calculator estimates three core metrics: monthly cash flow, cash-on-cash return, and projected long-term ROI. It combines your purchase price, financing terms, rental income, and operating expenses to model yearly performance. By layering appreciation, management fees, and selling costs into the projection you see a more realistic picture of total return than a simple rent-minus-expense estimate.
Formula overview
The core formulas follow standard real-estate underwriting:
- Net operating income (NOI):
- Monthly cash flow:
- Cash-on-cash return:
- Total ROI after years: combines accumulated cash flow, equity paydown, appreciated value, and selling costs.
The loan payment uses the standard amortization expression , with as loan amount, as monthly rate, and as total payments.
Interpreting the results
Cash flow shows your monthly profit after mortgage, expenses, and vacancy assumptions. Positive cash flow means the property covers its own costs and produces income from day one. Negative cash flow signals that you will need additional savings to support the property until rents rise.
Cash-on-cash return divides annual cash flow by upfront cash invested (down payment plus closing costs if you include them). Investors often aim for 8–12% CoC returns, though acceptable thresholds vary by market risk, property class, and financing.
Projected ROI compounds appreciation, principal paydown, and cash flow over the chosen horizon. Selling costs and management fees reduce the headline number, providing a more conservative outlook than ignoring transaction friction.
Scenario planning
| Input tweak | Effect on ROI |
|---|---|
| Increase vacancy from 5% to 10% | Lowers annual cash flow and delays break-even |
| Add 8% management fee | Reduces cash-on-cash return by several points but saves personal time |
| Raise appreciation from 2% to 4% | Boosts long-term ROI due to higher sale price and equity |
Use the copy button to paste outputs into a spreadsheet and compare multiple purchase scenarios side by side.
Worked example
Imagine buying a $300,000 duplex with 20% down at 6% interest over 30 years. Monthly rent totals $3,000, operating expenses are $900, vacancy is 5%, and management takes 8%. The calculator shows roughly $240 of monthly cash flow, a cash-on-cash return near 4.8%, and a 10-year ROI of about 72% after appreciation and principal reduction. Experiment with raising rent or refinancing later to see how the trajectory shifts.
Who benefits from the tool
New investors can gauge whether a property covers its costs before making an offer. Experienced landlords can test alternative financing, rent increases, or professional management fees. Advisors and agents may export the results to communicate opportunities or highlight risks with clients.
Limitations and next steps
The calculator assumes fixed interest, constant appreciation, and steady rents. It omits taxes from capital gains, depreciation recapture, and the time value of money. Treat the output as a first-pass underwriting tool, then refine with full pro forma models, local tax data, or consultation with financial professionals.