What is the ROI Calculator?

The ROI Calculator computes return on investment for rental properties including cash-on-cash return, annual cash flow, and overall ROI metrics.

What is cash-on-cash return?

Cash-on-cash return measures annual cash flow divided by total cash invested. It shows the return on your actual cash outlay, not including appreciation.

What factors affect rental property ROI?

Factors include purchase price, rental income, vacancy rate, operating expenses, financing costs, and appreciation potential.

What is a good ROI for rental properties?

Target ROI varies by market and risk tolerance. Many investors seek 8-12% cash-on-cash returns, though this varies significantly by location and strategy.

Free Calculator

Real Estate ROI Calculator

Calculate return on investment, cash-on-cash return, and cap rate for rental properties. Essential for investment analysis and real estate exam prep.

Investment Calculator

Enter property details to calculate returns

Purchase Price

Total purchase price of the property

Down Payment

Cash down payment amount

Closing Costs

Estimated closing costs and fees

Monthly Rent

Expected monthly rental income

Monthly Expenses

Taxes, insurance, maintenance, etc.

Vacancy Rate

Expected vacancy percentage

Return Metrics

Cash-on-Cash Return28.36%

Cap Rate6.24%

Gross Rent Multiplier10.4x

Cash Flow

Monthly Cash Flow$1,300.00

Annual NOI$15,600.00

Investment Summary

Total Cash Invested$55,000.00

Gross Annual Rent$24,000.00

Annual Expenses$7,200.00

How It Works

1. Enter Purchase Details

Input the purchase price, your down payment, and estimated closing costs.

2. Add Income & Expenses

Enter expected monthly rent, operating expenses, and vacancy rate.

3. Analyze Returns

Instantly see cash-on-cash return, cap rate, and monthly cash flow projections.

Understanding ROI Metrics

Cash-on-Cash Return

Cash-on-Cash = (Annual Cash Flow / Total Cash Invested) x 100

Measures the annual return on the actual cash you invest. A good target is 8-12%.

Cap Rate (Capitalization Rate)

Cap Rate = (NOI / Purchase Price) x 100

Measures property value relative to income. Typical range: 4-10% depending on market.

Gross Rent Multiplier (GRM)

GRM = Purchase Price / Annual Gross Rent

Quick metric to compare properties. Lower GRM generally indicates better value.

Frequently Asked Questions

Understanding Real Estate Investment Returns

Analyzing the potential return on investment (ROI) is crucial before purchasing any rental property. Our free ROI calculator helps you evaluate investment opportunities by calculating key metrics like cash-on-cash return, cap rate, and gross rent multiplier. Whether you're a seasoned investor or just getting started, understanding these calculations is essential for making profitable investment decisions.

Cash-on-Cash Return vs. Cap Rate

While both metrics measure investment performance, they serve different purposes. Cap rate measures the property's potential return independent of how you finance it, making it useful for comparing properties. Cash-on-cash return shows your actual return based on the cash you invest, accounting for leverage. When using financing, your cash-on-cash return is typically higher than cap rate because you're controlling more property with less of your own money.

The Importance of Accurate Expense Estimation

One of the biggest mistakes new investors make is underestimating expenses. Beyond obvious costs like property taxes and insurance, you should budget for maintenance (typically 1-2% of property value annually), property management (8-10% of rent if using a manager), vacancy losses, and reserves for major repairs. Being conservative with your expense estimates helps ensure your actual returns match your projections.

ROI Calculations for Real Estate Exams

Cap rate and gross rent multiplier calculations are frequently tested on real estate licensing exams. Understanding how to compute these values and interpret what they mean is essential for passing your exam and advising investor clients. Practice calculating these metrics with different scenarios to build confidence and speed for exam day.