Rental Property ROI Calculator

How this calculator works

Rental property returns are measured with a few standard metrics, each answering a different question:

• NOI (Net Operating Income) — rental income minus operating expenses, before financing. The property's income before the mortgage.
• Cap rate — NOI divided by purchase price. A quick way to compare properties regardless of how they're financed.
• Cash flow — NOI minus your actual mortgage payments. What lands in your pocket each year.
• Cash-on-cash return — cash flow divided by your down payment. Your actual return on the cash you put in, financing included.

Why cap rate and cash-on-cash return can disagree

A property can have a modest cap rate but a strong cash-on-cash return if it's financed well — leverage amplifies returns on the cash you actually put down. That's also the risk: the same leverage amplifies losses if rents fall or expenses rise. Look at both numbers together, not just the more flattering one.

What's not included

This model excludes vacancy allowance, appreciation, and tax effects (like depreciation). Experienced investors typically build in a vacancy assumption of 5–8% of rental income into their operating expenses — worth adding to your operating expenses figure for a more conservative estimate.