What is a good ROI for rental property?

A good ROI for rental property typically ranges from 8-12% annually. Cash-on-cash returns of 8-10% are considered good, while cap rates of 5-10% are common depending on location and property type.

What is cash-on-cash return?

Cash-on-cash return measures the annual pre-tax cash flow relative to the total cash invested. It's calculated as: Annual Cash Flow ÷ Total Cash Invested × 100. This metric shows the return on your actual out-of-pocket investment.

What is cap rate in real estate?

Cap rate (capitalization rate) is the ratio of Net Operating Income (NOI) to the property's purchase price. It measures the property's potential return without considering financing. Cap Rate = NOI ÷ Property Price × 100.

What is the 1% rule in real estate?

The 1% rule states that monthly rent should be at least 1% of the purchase price. For example, a $200,000 property should rent for at least $2,000/month. This is a quick screening tool, not a comprehensive analysis.

Rental Property ROI Calculator

Analyze your real estate investment with comprehensive ROI metrics including cash flow, cap rate, and cash-on-cash return.

Real Estate Investment Analysis

Enter property details to calculate your potential returns

Property Purchase

Purchase Price ($) Property purchase price

Down Payment (%) Percentage of purchase price

Closing Costs ($) Fees, title, appraisal, etc.

Rehab/Repair Costs ($) Initial renovation costs

Financing

Interest Rate (%) Annual mortgage rate

Loan Term (Years) Mortgage duration

Rental Income

Monthly Rent ($) Expected monthly rental income

Other Monthly Income ($) Laundry, parking, storage, etc.

Operating Expenses (Monthly)

Property Tax ($/year) Annual property tax

Insurance ($/year) Annual insurance premium

HOA Fees ($/month) Monthly HOA dues

Maintenance (%) % of rent for repairs

Vacancy Rate (%) Expected vacancy percentage

Property Management (%) % of rent (0 if self-managed)

Utilities ($/month) If landlord pays utilities

Annual Appreciation (%) Expected property appreciation

Investment Analysis Results

Monthly Cash Flow

after all expenses

Cash-on-Cash Return

annual return on cash

Cap Rate

NOI / Price

Total ROI

including appreciation

1% Rule

Target: Rent = 1% of Price

50% Rule Check

Expenses should be ~50% of rent

DSCR

0.00

Target: > 1.25

Cash Flow Summary

Gross Rent

Operating Expenses

-$0

NOI

Mortgage Payment

-$0

Gross Rent Multiplier

Annual NOI

Net Operating Income

Break-Even Occupancy

Monthly Expense Breakdown

Mortgage

Taxes

Insurance

Maintenance

Other

Monthly Breakdown

Gross Rental Income $0

Less: Vacancy -$0

                    Effective Gross Income
                    $0
                

Property Tax -$0

Insurance -$0

Maintenance -$0

Management + Other -$0

                    Net Operating Income
                    $0
                

Mortgage Payment (P&I) -$0

                    Cash Flow
                    $0
                

Total Investment Summary

Down Payment $0

Closing Costs $0

Rehab Costs $0

Total Cash Invested $0

Loan Amount $0

Annual Cash Flow $0

5-Year Projection

Year	Property Value	Annual Cash Flow	Equity Built	Total Return	ROI

Key Formulas

Cash-on-Cash = Annual Cash Flow / Total Cash Invested | Cap Rate = NOI / Purchase Price

Understanding Rental Property Metrics

Key ROI Metrics

Cash-on-Cash Return: Measures annual cash flow as % of cash invested
Cap Rate: NOI divided by property price (ignores financing)
Total ROI: Includes cash flow, appreciation, and equity
DSCR: NOI divided by debt service (lenders want > 1.25)

Quick Analysis Rules

1% Rule: Monthly rent = 1% of purchase price
2% Rule: Monthly rent = 2% of price (cash flow focus)
50% Rule: Operating expenses = ~50% of rent
70% Rule: For flips: ARV x 70% - repairs = max offer

What's a Good Investment?

Cash-on-Cash Return: 8-12% or higher
Cap Rate: 5-10% (varies by market)
Positive monthly cash flow: $100-300+ minimum
GRM: Under 12-15 in most markets
DSCR: Above 1.25

Hidden Costs to Consider

Capital expenditures (roof, HVAC, etc.)
Tenant turnover costs
Legal and eviction costs
Landscaping and snow removal
Accounting and tax preparation