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Real Estate ROI Calculator

Make data-driven investment decisions with our comprehensive property analysis tool

ROI Calculator

Analyze your real estate investment returns

How This Calculator Works

This comprehensive ROI calculator helps you evaluate potential real estate investments by analyzing multiple financial metrics. Enter your property details, financing terms, expected income, and operating expenses to get instant insights into:

  • Cash Flow Analysis: Monthly and annual cash flow projections
  • Return Metrics: Cash-on-Cash ROI, Cap Rate, and Total ROI including equity buildup
  • Risk Assessment: DSCR, Break-even ratio, and operating expense ratios
  • Long-term Projections: 10-year cash flow and equity growth analysis

💡 Pro Tip: Use the scenario selector to compare current, best case (+5% income), and worst case (-5% income) projections. Hover over any metric or input field for detailed explanations.

📚 Example Investment Scenarios

Use the example scenarios below to understand different investment outcomes.

🏠 Break-Even Starter Rental

Typical first investment property - negative cash flow but positive long-term returns through appreciation and equity buildup.

$450k single-family home • 20% down • $3,200/mo rent

🌟 Excellent Cash Flow Property

Multi-family in midwest market with strong positive cash flow and quick payback period.

$180k duplex • 25% down • $3,700/mo rent

⚠️ Poor Investment Example

Overpriced luxury property with high expenses - negative cash flow AND negative total returns.

$850k luxury condo • $450/mo HOA • $3,500/mo rent

💰 All-Cash Purchase

No mortgage means positive cash flow but longer payback period. Lower risk, steady returns.

$185k rental property • 100% cash • $1,800/mo rent

About Payback Period: This shows how long it takes to recover your initial investment through cash flow alone. Properties with negative cash flow show "Never" - but they can still be good investments if appreciation and equity buildup provide strong total returns. A 5-10 year payback is typical for good rentals. Cash purchases often have longer payback periods but lower risk.

-$570

Monthly Cash Flow

Net income after all expenses and mortgage payments. Positive cash flow means the property pays for itself and generates profit.

-6.22%

Cash on Cash ROI

Annual cash flow ÷ Total cash invested. Shows the return on your actual cash investment. 8%+ is considered good.

4.87%

Cap Rate

Net Operating Income ÷ Purchase price. Measures property performance independent of financing. 6%+ is typically good.

0.78%

Gross Monthly Yield

Monthly rent ÷ Purchase price. Properties meeting the 1% rule (rent = 1% of price) typically have positive cash flow.

0.76

DSCR

Debt Service Coverage Ratio - NOI ÷ Annual Debt Service. Lenders typically require 1.25 or higher.

111.29%

Break-Even Ratio

% of gross income needed to cover all expenses. Below 80% is considered healthy.

9.38%

Total ROI

Total return including cash flow, equity buildup, and 3% appreciation.

10.7

GRM

Gross Rent Multiplier - Purchase price ÷ Annual rent. Lower is better (typically 8-12).

Never

Payback Period

Years to recover initial investment through cash flow.

42.86%

Operating Expense Ratio

Operating expenses as % of gross income. The 50% rule suggests operating expenses typically equal ~50% of gross rent. Lower is better for cash flow.

0.37%

5-Year Average Annual Return

Annualized return over 5 years including all cash flows and appreciation. Based on actual loan amortization. 10%+ is excellent.

-$45,103

Net Present Value (NPV)

Present value of all future cash flows minus initial investment, using 10% discount rate. Positive NPV means the investment beats a 10% return benchmark.

Property Details

$
$
$
$

Financing

20%$90,000
%
years

Income

$
5%

Monthly Operating Expenses

$
$
$
$
%
$
$
$
$

Advanced Settings

%
%
%

Investment Analysis Summary

Cash Flow Analysis

Monthly Income$3,500
Total Expenses$3,895
Net Cash Flow-$570
Annual Cash Flow-$6,841

Investment Metrics

Mortgage Payment$2,395
NOI (Monthly)$1,825
Total Initial Investment$110,000
Loan Amount$360,000
DSCR0.76
Break-Even Ratio111.29%
Total ROI9.38%
GRM10.7
Payback PeriodNever
Operating Expense Ratio42.86%
5-Year Average Annual Return0.37%
Net Present Value (NPV)-$45,103

10-Year Cash Flow Projection

Monthly Income vs Expenses

Investment Criteria

1% Rule0.78%
Property must meet the 1% rule, where monthly rent is at least 1% of the purchase price.
Positive Cash Flow-$570
Property must generate positive monthly cash flow after all expenses and debt service to be a sustainable investment.
Cash on Cash ROI-6.22%
Target: 8%+ (excellent), 5-8% (acceptable), <5% (poor). Measures annual return on your actual cash invested.
Cap Rate4.87%
Target: 6%+ for good investment properties. Higher cap rates indicate better returns but may signal higher risk areas.
DSCR0.76
Target: 1.25+ required by most lenders. Shows property generates 25% more income than needed for debt payments.
Break-Even Ratio111.29%
Target: <80% for healthy margin. Shows % of income needed to cover all expenses. Lower provides better vacancy cushion.
Total ROI9.38%
Target: 10%+ (excellent), 5-10% (acceptable). Includes cash flow, principal paydown, and 3% appreciation.
GRM10.7
Target: <10 for good value. Shows years to recoup purchase price from gross rent. Lower is better.
Payback PeriodNever
Target: <5 years. Time to recover initial investment through cash flow. Shorter periods reduce investment risk.
Operating Expense Ratio42.86%
Target: ≤50% follows the "50% Rule". Properties with lower ratios have better profit margins and cash flow.
5-Year Average Annual Return0.37%
Target: 10%+ (excellent), 5-10% (acceptable). 5-year projected return including all cash flows and appreciation.
Net Present Value (NPV)-$45,103
Target: >$0. Positive NPV means the investment beats a 10% return benchmark. Higher NPV indicates better investment opportunity.

Understanding Your Investment Metrics

Cash on Cash Return

Cash on Cash Return measures the annual pre-tax cash flow relative to the total cash invested. This metric helps you understand the efficiency of your cash investment.

Formula:(Annual Cash Flow ÷ Total Cash Invested) × 100

A good Cash on Cash return typically ranges from 8-12% for residential properties.

Capitalization Rate

Cap Rate is the expected rate of return based on the property's net operating income, independent of financing. It's useful for comparing properties across different markets.

Formula:(Net Operating Income ÷ Property Value) × 100

Cap rates vary by market but typically range from 4-10% for residential properties.

Monthly Cash Flow

Monthly Cash Flow is the amount left after all expenses and mortgage payments. Positive cash flow means the property generates income; negative means you're paying out of pocket.

Formula:Rental Income - Operating Expenses - Mortgage Payment

Aim for at least $200-300 positive cash flow per unit for a healthy investment.

Total ROI

Total ROI considers all returns including cash flow, principal paydown, tax benefits, and appreciation. This comprehensive metric gives you the complete picture of your investment performance.

Components:Cash Flow + Principal Paydown + Tax Benefits + Appreciation

A total ROI of 15-20% or higher is considered excellent for real estate.

Pro Tips for Using This Calculator

1

Always use conservative estimates for rental income and optimistic estimates for expenses to avoid surprises.

2

Include all expenses: property taxes, insurance, HOA fees, maintenance, property management, and vacancy allowance.

3

Consider the 1% rule: monthly rent should be at least 1% of the purchase price for positive cash flow.

4

Factor in capital expenditures: budget 5-10% of rental income for major repairs and replacements.