Rental Property ROI Calculator
Estimate the return on a rental property: cap rate, cash-on-cash return, total ROI and annualized return (IRR) over your holding period, year by year.
Return on a rental comes from three places: the cash flow left after expenses and the mortgage, the loan balance your tenants pay down, and any rise in the property’s value. This calculator projects all three over your holding period and reports the quick year-one measures investors compare (cap rate and cash-on-cash return) alongside total ROI and the annualized return.
How to use this tool
- Enter the price, down payment, closing costs and any repairs before the first tenant.
- Enter the mortgage rate and term.
- Enter the rent, vacancy and operating costs.
- Set yearly growth for rent and expenses, property value growth, the holding period and selling costs.
Formula
Cap rate = NOI ÷ price
Cash-on-cash = year-1 cash flow ÷ cash invested
Total ROI = (Σ cash flow + sale proceeds − cash invested) ÷ cash invested
NOI is collected rent minus operating expenses (not the mortgage). Cash flow is NOI minus mortgage payments. Sale proceeds are the sale price minus selling costs and the loan balance. Year-end cash flows include sale in the last year. IRR is reported only with one sign change and a root above −100%; multiple sign changes can give ambiguous returns. Total ROI uses upfront cash as its denominator, even when later cash flows need funding.
Example
A $300,000 rental with 25% down ($75,000), $9,000 of closing costs and $10,000 of repairs needs $94,000 of cash. The $225,000 loan at 7% for 30 years costs $1,496.93 a month. Rent of $2,500 less 5% vacancy, 8% management, an 8% repair reserve, $3,600 tax and $1,500 insurance gives year-one NOI of $18,720: a 6.24% cap rate, but only $756.83 of cash flow, a 0.81% cash-on-cash return. Held 10 years with 3% growth and sold with 6% costs, it returns a total ROI of about 135%, or 9.51% a year (IRR).
Frequently asked questions
What is a good ROI on a rental property?
It depends on risk, location and leverage. Compare the annualized return with what the same cash could earn elsewhere, and check that year-one cash flow is positive so you are not funding the property from your pocket.
What is the difference between cap rate and cash-on-cash return?
Cap rate ignores financing and compares NOI with the price. Cash-on-cash compares the cash flow after mortgage payments with the cash you actually put in, so it changes with your down payment and rate.
Why is total ROI so much higher than cash-on-cash?
Total ROI adds loan paydown and appreciation, which you collect when you sell. With a mortgage, a small rise in value is a large gain relative to your down payment.
This tool gives an estimate for general information only. It is not financial, tax, legal or medical advice — check with a qualified professional before you rely on the result.
Last updated: 2026-10-30