Rental Property ROI Calculator

How to Use This ROI Calculator

Enter your annual cash flow (income minus all expenses including mortgage), your down payment amount, and closing costs. The calculator shows your cash-on-cash return: the percentage return on the actual cash you invested. This is the most practical measure of rental property ROI because it reflects your real out-of-pocket investment.

ROI Formula

Cash-on-cash return measures the annual pre-tax cash income earned on the cash invested in a property. It's the most practical measure of rental property ROI because it reflects actual money in your pocket relative to money out of your pocket.

Worked Example

You bought a $300,000 property with 20% down ($60,000) and paid $5,000 in closing costs. Your total cash invested is $65,000. The property generates $9,600/year in cash flow after all expenses and mortgage. Your cash-on-cash ROI is $9,600 / $65,000 = 14.8%. That's a 14.8% annual return on your invested cash, significantly better than most stock market returns.

What is a Good ROI?

Most investors target a minimum 8-12% cash-on-cash return. Returns above 12% are considered strong. Above 15% is excellent. For context, the S&P 500 has historically averaged about 10% annual returns, so beating that with a rental property (plus getting appreciation, tax benefits, and equity buildup) makes real estate compelling. In expensive markets, 5-8% cash-on-cash returns are common and acceptable because appreciation potential is higher.

Factors That Affect ROI

Cash-on-cash ROI is heavily influenced by leverage. Putting 20% down vs. 25% down changes your ROI dramatically because a smaller down payment means less cash invested (the denominator). Interest rates affect mortgage payments, which affect cash flow. Property management costs (self-manage vs. hire a PM) can swing ROI by several percentage points. Vacancy rate and maintenance costs are the biggest variable risks.