Rental Property ROI Calculator
Calculate rental property ROI, cap rate, and cash-on-cash return from price, rent, and expenses.
Returns net income and break-even occupancy rate.
Rental property ROI measures how well your investment property performs financially. This calculator computes three key metrics: monthly cash flow, cap rate, and cash-on-cash return.
Formulas:
Cash Flow = Monthly Rent (adjusted for vacancy) - Monthly Expenses
Cap Rate (Capitalization Rate):
Cap Rate = (Annual Net Operating Income / Purchase Price) × 100
Cash-on-Cash Return:
Cash-on-Cash = (Annual Cash Flow / Total Cash Invested) × 100
What each variable means:
- Purchase Price — what you paid for the property.
- Down Payment — your upfront cash investment. The calculator adds estimated closing costs (~3%) to get total cash invested.
- Monthly Rent — gross rent before deductions. The calculator applies an 8% vacancy factor automatically.
- Monthly Expenses — mortgage payment, property tax, insurance, and maintenance.
When to use this calculator: Use it before buying a rental property to evaluate whether the investment makes financial sense. Compare multiple properties side by side to find the best opportunity.
Practical example: Purchase price = $250,000, down payment = $50,000, monthly rent = $1,800, mortgage = $1,100, tax = $200, insurance = $100, maintenance = $150. Effective rent (after 8% vacancy) = $1,656. Monthly cash flow = $1,656 - $1,550 = $106/month. Annual NOI = $14,472. Cap rate = 5.79%. Cash-on-cash return on $57,500 invested (down payment + closing) = 2.21%.
Benchmarks and rules of thumb:
- Cap rate above 5% is generally considered decent
- Cash-on-cash return above 8% is considered strong
- The 1% rule: monthly rent should be at least 1% of purchase price (e.g., $2,500 rent on a $250,000 property)
- Gross Rent Multiplier (GRM) = Purchase Price / Annual Rent — lower is better, under 15 is generally favorable
Tips: Budget conservatively for vacancy (8–10%) and maintenance (1–2% of property value per year). Property management fees of 8–12% of rent apply if you hire a manager. Always verify actual tax and insurance rates for the specific property before purchasing.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
SuperGlobalCalculator is independently built and maintained. See how we build and verify our calculators.