Property ROI Calculator
Calculate the return on your rental property investment. See cash flow, appreciation, and total return over time.
How the Property ROI Calculator works
Enter purchase price, rental income, expenses, and appreciation rate. Get annual and total ROI with detailed breakdown.
Know if a property is a good investment before you buy. Compare properties and maximize your returns.
How it works
Tutorial
Real estate ROI shows if a rental property is a good investment. You make money two ways: monthly cash flow and property appreciation over time. Both matter.
Use the calculator above for instant results, or follow this guide to calculate manually.
The Formula
| Metric | Formula |
|---|---|
| Annual Cash Flow | (Monthly Rent × 12) – Annual Expenses |
| Cash-on-Cash Return | (Annual Cash Flow ÷ Total Cash Invested) × 100 |
| Appreciation Return | (Annual Appreciation ÷ Total Cash Invested) × 100 |
| Total ROI | Cash-on-Cash + Appreciation Return |
Step-by-Step Example
Let’s analyze a rental property investment.
Step 1: Calculate Your Total Investment
| Expense | Amount |
|---|---|
| Purchase price | $300,000 |
| Down payment (20%) | $60,000 |
| Closing costs (3%) | $9,000 |
| Repairs before renting | $6,000 |
| Total cash invested | $75,000 |
Step 2: Calculate Monthly Rental Income
| Item | Amount |
|---|---|
| Monthly rent | $2,400 |
| Vacancy (5% of year) | – $120 |
| Effective monthly income | $2,280 |
Note: Always account for vacancy – no property is rented 100% of the time
Step 3: Calculate Monthly Expenses
| Expense | Monthly Amount |
|---|---|
| Mortgage payment (30yr at 7%) | $1,597 |
| Property tax | $300 |
| Insurance | $150 |
| HOA fees | $100 |
| Maintenance (8% of rent) | $192 |
| Property management (10%) | $240 |
| Total monthly expenses | $2,579 |
Step 4: Calculate Monthly Cash Flow
| Item | Amount |
|---|---|
| Effective monthly income | $2,280 |
| – Monthly expenses | – $2,579 |
| Monthly cash flow | -$299 |
Annual cash flow:-$299 × 12 =-$3,588 per year
This property has negative cash flow (you lose money each month).
Step 5: Calculate Cash-on-Cash Return
Return from cash flow only:
(-$3,588 ÷ $75,000) × 100 =-4.8%
Step 6: Calculate Appreciation Return
Property values in this area grow 4% per year:
| Item | Amount |
|---|---|
| Property value | $300,000 |
| Annual appreciation (4%) | $12,000 |
| Appreciation return | ($12,000 ÷ $75,000) × 100 |
| Appreciation ROI | 16% |
Step 7: Calculate Total ROI
| Return Type | ROI |
|---|---|
| Cash flow return | -4.8% |
| Appreciation return | +16.0% |
| Total annual ROI | 11.2% |
Step 8: Calculate Loan Paydown Benefit
Your tenants are paying your mortgage, building equity:
| Item | Year 1 |
|---|---|
| Annual mortgage payments | $19,164 |
| Principal paid down | $2,836 |
| Interest paid | $16,328 |
| Equity buildup return | 3.8% |
($2,836 principal ÷ $75,000 invested) × 100 = 3.8%
Step 9: Calculate True Total Return
| Benefit | Annual ROI |
|---|---|
| Cash flow | -4.8% |
| Appreciation | +16.0% |
| Loan paydown | +3.8% |
| Total ROI | 15.0% |
What This Means
Despite losing $299/month in cash flow, this property delivers a 15% annual return when you include appreciation and mortgage paydown. You’re trading short-term cash for long-term wealth building.
Is this a good investment?
- 15% annual return beats most alternatives (stocks average 10%)
- But negative cash flow is risky – you need reserves for vacancies
- Works if you have steady income to cover monthly losses
- Risky if appreciation slows or property needs major repairs
Better investment profile:Positive cash flow (>$200/month) + appreciation. This provides income now and wealth later.
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