Real Estate Investment ROI Calculator

Return on investment for a rental property comes down to one comparison: how much annual cash flow the property throws off against the cash you put in to acquire it. A clear ROI figure is what separates a profitable deal from a money pit and lets you line up competing properties side by side.

The cash-on-cash figure follows a single formula: (Annual Rental Income - Annual Expenses - Annual Mortgage Payments) ÷ Total Cash Invested × 100. The calculator works out the mortgage payment itself, on a 30-year loan for the purchase price minus the down payment at an assumed 6.5% rate, so enter only the other expenses: property taxes, insurance, maintenance, a vacancy allowance, and property management fees. Total cash invested pulls together your down payment, closing costs, and any initial repairs or improvements made before the unit produces income.

Two errors trip up most investors. The first is ignoring vacancy rates, which typically run 5-10% and quietly erode projected income; the second is lowballing maintenance, which averages 1-2% of property value each year. Note too that this figure is a cash-on-cash return. It does not capture total return, which would fold in property appreciation and tax benefits such as depreciation deductions.