Rental Property ROI Calculator
Analyze any investment property with key metrics: net operating income (NOI), cap rate, cash-on-cash return, gross yield, and monthly cash flow — all in one place.
Purchase Details
Annual Expenses
% of effective gross income
% of property value/year
HOA, utilities, lawn, etc.
Key Rental Property Metrics Explained
Net Operating Income (NOI)
NOI is annual rental income minus all operating expenses — before mortgage payments. It's the most important metric for comparing properties independently of financing.
NOI = Effective Gross Income − Operating Expenses
Cap Rate (Capitalization Rate)
Cap rate measures a property's return assuming you paid all cash (no mortgage).
Cap Rate = NOI ÷ Purchase Price × 100
- 6%+ cap rate — Generally considered a good return in most markets
- 4–6% — Acceptable in appreciating or low-vacancy markets
- Under 4% — Typical of expensive coastal markets; appreciation must carry returns
Cash-on-Cash Return
CoC return measures the annual pre-tax cash flow relative to your actual cash invested (down payment + closing costs).
Cash-on-Cash = Annual Cash Flow ÷ Total Cash Invested × 100
Many investors target 8–12% CoC. This is often more useful than cap rate because it accounts for your specific financing.
The 1% Rule
A quick screening rule: if the monthly rent is at least 1% of the purchase price, the property is likely to cash flow positively. A $200,000 property should rent for at least $2,000/month. It's a rough filter, not a replacement for full analysis.
Frequently Asked Questions
What vacancy rate should I use? The national average residential vacancy rate is approximately 6–7%, but markets vary. Use local data if available. A 5% default is reasonable for most markets.
What expenses am I missing? This calculator covers the main categories. You may also want to budget for capital expenditures (roof, HVAC, appliances) — many investors set aside an additional 5–10% of rent for CapEx.
Should I include appreciation in ROI? Appreciation is not included here because it's uncertain. Many investors evaluate deals on cash flow alone and treat appreciation as a bonus.
