Rental Property ROI Calculator
Enter a deal and get the numbers that actually matter on a rental: cash-on-cash return, cap rate, debt-service coverage, and monthly cash flow. It uses real mortgage math, so the return reflects your financing, not just the price.
The clearest ROI on a rental is cash-on-cash return: annual pre-tax cash flow divided by total cash invested. Cash flow is net operating income minus the mortgage. Cash invested is your down payment plus closing costs and rehab. So a property that throws off 6,000 dollars of cash flow a year on 100,000 dollars of cash in returns 6 percent cash-on-cash. Cap rate, which strips out financing, is the second lens: NOI divided by price. Enter your numbers below and the calculator returns cash-on-cash return, cap rate, DSCR, and monthly cash flow at once.
Extra cash in.
Parking, laundry, pet rent, fees.
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Enter price, financing, rent, and expenses to see your return.
- Cash-on-cash is a first-year, pre-tax return. It does not include appreciation, loan paydown, or tax benefits, which are real but not guaranteed.
- Use real rents and honest expenses. Understating operating expenses is the most common way a rental deal looks better on a calculator than it does in life.
- Budget for capital expenditures separately. This models operating cash flow, not a new roof or HVAC.
How do you calculate ROI on a rental property?
Lead with cash-on-cash return: annual pre-tax cash flow divided by total cash invested. Build the cash flow first. Take gross rent plus other income, subtract vacancy to get effective gross income, subtract operating expenses to get NOI, then subtract the mortgage. What is left is cash flow. Divide it by your down payment plus closing and rehab, and you have cash-on-cash return.
I manage 1,500 apartment units across 48 properties in 7 states, and cash-on-cash is the number I judge a leveraged deal on, because it reflects what the equity actually earns after the loan, not just what the property yields unlevered.
Cash-on-cash return vs cap rate
Cap rate is NOI divided by price and ignores your loan. Cash-on-cash is cash flow divided by the cash you invested and reflects your financing. A single property has one cap rate but a different cash-on-cash return for every buyer, because leverage changes the equity return. Use cap rate to judge the asset and cash-on-cash to judge your position in it.
What is a good ROI on a rental property?
For cash-on-cash return on stabilized rental property, 6 to 10 percent is a solid range in most markets. Below that you are buying for appreciation or forced NOI growth rather than current income. Above 10 percent looks strong but usually carries more risk than it first appears, so verify the rents, the expenses, and the condition before you underwrite it.
Why DSCR belongs in the math
Debt-service coverage ratio is NOI divided by annual debt service, and it is the number a lender checks first. Most want at least 1.20. Across the deals I run, I watch DSCR alongside the return, because a property can show an attractive cash-on-cash number and still sit too close to not covering its own debt. A high return on a thin DSCR is fragile.
Once you have NOI from a deal, our cap rate calculator shows what improving it is worth in value, and our NOI calculator breaks the NOI itself down line by line.
Common questions
How do you calculate ROI on a rental property?
The most useful ROI measure for a rental is cash-on-cash return: annual pre-tax cash flow divided by the total cash you invested. Cash flow is net operating income minus the mortgage. Cash invested is your down payment plus closing costs and any rehab. So if a property produces 6,000 dollars of annual cash flow on 100,000 dollars of cash in, the cash-on-cash return is 6 percent. Cap rate, which ignores financing, is a second useful ROI lens.
What is a good ROI on a rental property?
For cash-on-cash return on stabilized rental property, roughly 6 to 10 percent is a solid range in most markets. Below that, you are usually buying for appreciation or forced growth rather than current income. Above 10 percent looks great but often carries more risk, an older asset, a softer market, or optimistic numbers, so verify the rents and expenses before you trust it.
What is the difference between cash-on-cash return and cap rate?
Cap rate is NOI divided by purchase price and ignores your loan, so it measures the property. Cash-on-cash is annual cash flow divided by the cash you actually invested, so it measures your leveraged position after financing. A property has one cap rate but a different cash-on-cash return for every buyer, depending on the loan. You want both numbers.
Does rental property ROI include appreciation?
Cash-on-cash return does not; it is a first-year, pre-tax cash measure. Total return on a rental also includes appreciation, loan paydown, and tax benefits, which can add several points over a full hold but are not guaranteed. Start with cash-on-cash because it is knowable today, then treat appreciation and paydown as upside you underwrite conservatively.
What is DSCR and why does it matter?
Debt-service coverage ratio is NOI divided by annual debt service. It tells a lender whether the property's income covers the loan. Most lenders want a DSCR of at least 1.20, meaning NOI is 20 percent above the mortgage. A DSCR under 1.0 means the property does not cover its own debt, which is a warning regardless of how the other returns look.