US Rental Property ROI Calculator

Run the core rental property metrics from one set of inputs: NOI, cap rate, cash-on-cash return, debt service coverage ratio (DSCR), monthly cash flow, and holding-period ROI. Enter the purchase and loan terms, rent and vacancy, operating costs, an appreciation rate, and how long you plan to hold.

What each result tells you

All outputs are pre-tax estimates for informational purposes only. They depend entirely on the rent, vacancy, and expense figures you enter.

Worked example: the default inputs

Inputs: price $300,000; closing costs $6,000; rehab $10,000; 20% down; 7% for 30 years; tax $3,600 and insurance $1,200 a year; management 8%; repairs $100 and CapEx $100 a month; 5% vacancy; rent $2,200; 3% appreciation; 5-year hold.

The default deal is a bet on appreciation: it loses $274 a month, its DSCR is below 1.0, and every dollar of the 41% return comes from the assumed 3% annual price growth. Set appreciation to 0% and the five-year ROI becomes −21.63%.

Why cap rate and cash flow can disagree

The property's cap rate is 5.29%, but the mortgage costs $19,160.71 a year on a $240,000 loan — a loan constant of 7.98%. When the loan constant is above the cap rate, each borrowed dollar costs more than it earns, and leverage pushes cash flow negative. You can fix this three ways: a lower price (raising the cap rate), a lower rate or longer term (lowering the loan constant), or a bigger down payment (borrowing fewer expensive dollars).

How sensitive is the result?

Each row changes one input from the default:

Two things stand out. A $400 rent increase moves annualized ROI by almost 4 points, so verify rent with real comparables before anything else. And buying $50,000 cheaper brings the property to break-even even though the rent did not change. Price discipline is the one input you control at the closing table.

Worked example: turning the default into a workable offer

Suppose comparables show the house should rent for $2,300, not $2,200, and you negotiate the price to $270,000. Property tax is reassessed with the price, falling to $3,240. You put 25% down. Everything else stays at the defaults.

The revised deal still is not a cash machine — $93 a month is a thin margin, and one repair wipes out a year of it — but it no longer depends on appreciation to avoid losing money. That is the minimum bar many buy-and-hold investors set: the property should at least carry itself at a 0% appreciation assumption. Notice that no single change did it. Price, rent, and down payment each contributed, which is typical.

If the revised numbers still fall short, the next levers are a lower interest rate (buying points, which you can test in the investment property mortgage calculator) or a different property.

What should you enter for expenses?

Use actual numbers wherever you can get them:

• Property tax: the county's current rate applied to your purchase price if your state reassesses on sale, not the seller's bill.
• Insurance: a written landlord-policy quote.
• Management: the fee in a manager's contract; if you self-manage, entering 0% is accurate but your time has a cost.
• Repairs and CapEx: two separate lines. Repairs cover routine fixes; CapEx is the reserve for roofs, HVAC, water heaters, and flooring. Estimate CapEx from the age and replacement cost of each major system.
• Vacancy: the share of a year the unit sits empty plus turnover time. One month empty per year is 8.3%.
• Utilities: only those you pay as the owner (often water, sewer, and trash).

Do not put the mortgage in expenses. It is financing, handled separately in debt service.

What the ROI leaves out, and how to add it back

The calculator's holding-period ROI counts cash flow and appreciation only. For a fuller picture on the default example:

Adjusted simple ROI is $24,564 ÷ $76,000 = 32.32%, or 5.76% annualized — about 1.4 points a year less than the calculator's figure. Income tax on cash flow, depreciation deductions, and tax at sale (including up to 25% on recaptured depreciation) would move it again. Use the rental after-tax cash flow calculator for the annual tax effect and the real estate capital gains tax calculator for the sale.

Reading DSCR correctly

DSCR = NOI ÷ annual debt service. At 1.00, rent after expenses pays the mortgage exactly. At 0.83, as in the default, the owner covers 17% of the payment from other income. Agency (Fannie Mae and Freddie Mac) loans for one-to-four unit rentals are approved on your personal debt-to-income ratio rather than a DSCR minimum; non-agency DSCR loans set their own thresholds. Either way, a DSCR below 1.0 means you need cash reserves to hold the property. If you plan to finance with your income, the real estate DTI and borrowing power calculator shows whether the payment fits.

Common input mistakes

• Using list rent from an ad instead of signed-lease comparables.
• Leaving CapEx at zero on an older house. A $12,000 roof every 20 years is $50 a month.
• Appreciation above long-run inflation to make a deal work. Run 0% as a floor case.
• Forgetting rehab in cash invested. The calculator includes it; make sure the number is complete.
• Comparing cap rates across markets without comparing rent growth, taxes, and insurance trends.

Next steps

For the full due-diligence process — rent comps, expense checks, and stress tests on a different example property — read how to analyze a rental property. To price the loan precisely, including PMI and DTI, use the investment property mortgage calculator.