Rental Property ROI Calculator
Calculating the return on investment (ROI) for a rental property is a key step in understanding whether an investment will be profitable. Enter your numbers below to evaluate a property’s potential.
%
%
%
Results Summary
What Is Return on Investment (ROI) in Real Estate?
Return on investment measures how much profit a rental property generates relative to what it cost you to acquire it. Expressed as a percentage, ROI lets you compare a property against other real estate opportunities—or against entirely different investments—on equal footing. The basic formula is simple:
For a rental property, the “gain” comes primarily from the cash flow that remains after collecting rent and paying all operating expenses and loan payments, plus any appreciation in the property’s value over time. The “cost” is the cash you put in out of pocket: your down payment, closing costs, and any renovation expenses. Because most rental purchases are financed, factors like your interest rate, loan term, and down payment size have a major impact on the final return—leverage can amplify both gains and losses.
No single number tells the whole story, which is why investors look at several complementary metrics, all of which this calculator provides:
Annual Cash Flow
The money left over each year after rent is collected and every expense—operating costs and loan payments—is paid. Positive cash flow means the property pays you; negative means you pay it.
Net Operating Income (NOI)
Annual rental income minus operating expenses, before any loan payments. NOI shows how the property itself performs, independent of how it’s financed.
Cap Rate
NOI divided by the purchase price. Cap rate makes it easy to compare properties of different sizes and prices; many investors consider 5–10% a healthy range.
Cash-on-Cash Return
Annual pre-tax cash flow divided by the actual cash you invested. This is often the most practical ROI measure for financed deals; 7–12% is commonly viewed as a strong result.
Gross Rent Multiplier (GRM)
Purchase price divided by annual gross rent. A quick screening tool—a lower GRM means you’re paying less for each dollar of rent the property produces.
Initial Investment
The total cash out of pocket—down payment, closing costs, and renovations. This is the denominator for your cash-on-cash return.
Used together, these metrics help you judge whether a property is likely to be profitable today and how its returns may grow as rents rise and the loan is paid down. A property with strong cash flow, a sensible cap rate, and a healthy cash-on-cash return is far more likely to build long-term wealth than one purchased on price alone.