Rental Property ROI Calculator
Analyze any rental property: cap rate, cash-on-cash return, monthly cash flow, and net operating income from your purchase and rental numbers.
Understanding the Rental Property ROI Calculator
This calculator evaluates a rental property using three core metrics: capitalization (cap) rate, cash-on-cash return, and annual cash flow. Together they show whether a property earns enough relative to its price and the cash you actually put in. It is built for investors screening deals and comparing properties before committing. Outputs are estimates based on the income and expense figures you enter; real returns hinge on accurate rent, vacancy, maintenance, and financing assumptions, so conservative inputs produce more trustworthy numbers than optimistic ones.
How it works
Enter purchase price, gross rental income, operating expenses, and, if financed, your down payment, loan payment, and closing costs. Net operating income (NOI) is rent minus operating expenses, excluding mortgage. Cap rate is NOI divided by price, a financing-neutral yield for comparing properties. Cash flow is NOI minus the annual mortgage payment, the cash left in your pocket. Cash-on-cash return divides annual cash flow by the total cash invested, showing the yield on your own money. Include vacancy, repairs, property management, taxes, and insurance in expenses, otherwise the metrics will overstate returns.
Worked example
A property costs 300,000 and rents for 30,000 a year. Operating expenses (taxes, insurance, management, repairs, vacancy) total 12,000, so NOI is 18,000 and cap rate is 18,000 / 300,000 = 6%. You put 60,000 down plus 6,000 closing costs (66,000 invested) and pay 14,400 a year on the mortgage. Cash flow is 18,000 − 14,400 = 3,600, so cash-on-cash return is 3,600 / 66,000 = about 5.5%.
Tips & common mistakes
- Always budget for vacancy and ongoing repairs; ignoring them is the most common way investors overstate returns.
- Cap rate ignores financing, so use it to compare properties; use cash-on-cash to judge your leveraged return.
- Positive cash flow does not guarantee a good deal; weak appreciation or high vacancy can still erode returns.
- Property management (typically 8 to 12 percent of rent) is a real cost even if you self-manage your time.
- Compare the cap rate to typical rates for similar properties in the same market, since norms vary widely by location.
Sources & methodology
- • U.S. Department of Housing and Urban Development — Rental housing resources (https://www.hud.gov)
- • Internal Revenue Service — Publication 527, Residential Rental Property (https://www.irs.gov)
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Reviewed by the TopOpenTools editorial team · Last updated June 2026. These tools provide general estimates for educational purposes only and are not financial, tax, insurance, investment, or medical advice. Verify important decisions with a qualified professional.
Frequently Asked Questions
What is cap rate?
Capitalization rate is annual net operating income (NOI) divided by the property price. It measures the unleveraged yield of a property — useful for comparing deals regardless of financing.
What is cash-on-cash return?
It is your annual pre-tax cash flow divided by the actual cash you invested (down payment plus closing costs). It reflects the return on the money you personally put in.
What counts as monthly expenses?
Property taxes, insurance, maintenance, property management, and HOA fees — everything except the mortgage payment, which is handled separately.