Rental ROI Calculator

Analyze buy-and-hold rental returns instantly. See your cash flow, cap rate, and investment score in real time.

1 Purchase

$
%
$50,000
%
$6,000

2 Financing

%
years
Loan: $150,000 · $998/mo

3 Income

$
%
Effective rent: $1,656/mo

4 Expenses

$
$
$
$
$
Total expenses: $450/mo

5 Growth

%
%
63 Moderate

Rental Investment Score

Monthly Cash Flow $208 $998/mo mortgage
Annual Cash Flow $2,497 $56,000 total invested
Cash-on-Cash Return 4.5% Annual return on invested capital
Cap Rate 7.2% NOI: $14,472/yr
DSCR 1.21x Below typical 1.25x threshold
GRM 9.3 Attractive price-to-rent ratio

Monthly Breakdown

Income: $1,656
Mortgage: $998
Expenses: $450
5-Year Projection: Est. property value: $231,855 · Equity: $90,657 · Total return: $57,195. Positive cash flow, but moderate returns. Consider negotiating a lower price or increasing rent to improve ROI.

How Rental Property Analysis Works

1

Purchase

Enter the purchase price, down payment, and closing costs. Your total cash invested determines the denominator for cash-on-cash return.

2

Finance

Set your loan terms — interest rate and duration. The mortgage payment is the single largest expense for most rental properties.

3

Income

Enter the monthly rent and vacancy rate. Effective rent accounts for the months the unit may sit empty between tenants.

4

Expenses

Account for property taxes, insurance, maintenance, management fees, and HOA dues. These reduce your net operating income.

5

Analyze

Review your cash flow, cap rate, cash-on-cash return, DSCR, and long-term projections. A strong rental works on day one and builds wealth over time.

Frequently Asked Questions

What is a good cap rate for a rental property?

A good cap rate depends on the market and property type. In most markets, 5-8% is considered solid for residential rentals. Higher cap rates (8-12%) are found in lower-cost markets or higher-risk properties, while premium markets like coastal cities often see 3-5%. Compare cap rates within the same market for the most meaningful analysis.

What is the 1% rule in real estate investing?

The 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price. For a $200,000 property, that means $2,000/month in rent. While not a hard requirement, properties meeting the 1% rule tend to cash flow well. Many investors in expensive markets adjust to 0.7-0.8% and compensate with appreciation.

How do you calculate cash-on-cash return for a rental property?

Cash-on-Cash Return = Annual Cash Flow ÷ Total Cash Invested. For example, if you put $50,000 down and earn $5,000/year in net cash flow after all expenses and mortgage, your cash-on-cash return is 10%. This metric shows the actual return on your out-of-pocket investment, making it more useful than cap rate for leveraged deals.

What is DSCR and why does it matter?

DSCR (Debt Service Coverage Ratio) = Net Operating Income ÷ Annual Debt Payments. A DSCR of 1.0 means income exactly covers debt. Most lenders require 1.2-1.25x for investment properties. A higher DSCR means more cash flow cushion for vacancies, repairs, or rate increases. DSCR loans use this ratio instead of personal income for qualification.

Should I factor in appreciation when analyzing a rental property?

Conservative investors focus on cash flow first and treat appreciation as a bonus. However, appreciation significantly impacts total returns over time — even 3% annual appreciation on a $200,000 property adds $30,000+ in equity over 5 years. The best deals work on cash flow alone and have appreciation as upside.

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