Real Estate ROI Calculator

Return on Investment (ROI) is the fundamental metric for evaluating rental property profitability. It tells you how efficiently your capital generates returns, enabling comparison across investment opportunities.

This calculator provides both simple ROI and cash-on-cash return. Simple ROI considers total investment; cash-on-cash focuses on actual cash invested (down payment), which is more relevant for leveraged investments.

Successful investors typically target 8-12% cash-on-cash returns. Remember that real estate also builds wealth through appreciation, loan paydown, and tax benefits—advantages not captured in simple ROI.

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How to Use This Calculator

1 Enter the property purchase price
2 Enter your down payment percentage (or amount)
3 Enter expected annual rental income
4 Enter estimated annual expenses (taxes, insurance, maintenance, etc.)
5 Click Calculate to see ROI and Cash-on-Cash return

Formula

ROI = (Annual Income - Expenses) ÷ Total Investment × 100
Cash-on-Cash = Annual Cash Flow ÷ Down Payment × 100

Example Calculation

Evaluating a $300,000 rental property

Inputs:

Purchase Price: $300,000
Down Payment: 25% ($75,000)
Annual Rent: $24,000
Annual Expenses: $8,000

Result:

Annual Cash Flow: $16,000. ROI: 5.3%. Cash-on-Cash Return: 21.3%

Pro Tips

Include ALL expenses for accurate results
Cash-on-cash is best for leveraged deals
Compare to alternative investments

Important Considerations

• All-cash purchases simplify calculation but change return dynamics
• Value-add properties may show low initial ROI but higher post-renovation returns
• High-appreciation markets often have lower cash yields—factor growth potential

Frequently Asked Questions

Target 8-12% cash-on-cash return for residential rentals. Simple ROI of 5-8% is typical when factoring all costs. Returns vary by market—high-appreciation areas often have lower cash yields but better total returns.

ROI measures return relative to total property value. Cash-on-Cash measures return on actual cash invested (your down payment). Cash-on-Cash is more relevant for leveraged investments since it shows return on YOUR money, not the bank's.

Include: property taxes, insurance, maintenance (budget 1-2% of value), property management (8-10% of rent), vacancy loss (5-8%), HOA fees, utilities you pay, and a reserve for capital expenditures.

Simple ROI focuses on cash flow. Total return includes appreciation, loan principal paydown, and tax benefits. Real estate's advantage is this multi-layered return—even modest cash flow properties can deliver strong total returns.