Real Estate Investment Calculator

ROI (return on investment) for a rental property is typically measured as cash-on-cash return: divide your annual pre-tax cash flow by the total cash you invested (down payment + closing costs + repairs). For example, if you invested $85,000 and earn $5,100 in annual cash flow, your cash-on-cash ROI is 6%. Cap rate is another common metric that ignores financing — it divides net operating income by the property value.

Cap rate (capitalization rate) measures a property's income potential independent of financing. It equals Net Operating Income divided by the property purchase price, expressed as a percentage. Generally, a cap rate between 4% and 10% is considered acceptable, depending on location and property type. Higher cap rates suggest better income potential but may also reflect higher risk or lower-demand areas.

Cash-on-cash return measures the annual cash flow relative to the actual cash you put into the deal (down payment, closing costs, repairs). Cap rate ignores your financing structure and measures property-level returns. Cash-on-cash is more relevant for leveraged investors because it reflects what your actual out-of-pocket investment earns. A property can have a low cap rate but a high cash-on-cash return if mortgage rates are favorable.

NOI is the annual income a property generates after subtracting all operating expenses (taxes, insurance, maintenance, management fees, HOA, utilities) but before deducting mortgage payments or income taxes. It is a key metric for evaluating a property's earning power regardless of how it is financed. NOI is the numerator used in the cap rate formula.

Vacancy rate represents the percentage of time your rental unit sits empty between tenants. Even a 5% vacancy rate reduces your effective annual rent by roughly 2.6 weeks of income. Most lenders and analysts use a 5–10% vacancy assumption for single-family rentals. In high-demand markets vacancy may be lower; in slower markets or with high tenant turnover, budget for more.

Key operating expenses include property taxes, landlord insurance, HOA dues, property management fees (typically 8–12% of rent), ongoing maintenance, repairs, and any utilities you pay. You should also factor in capital expenditure reserves for big-ticket replacements like roofs, HVAC, or appliances. Mortgage principal and interest are debt service costs, not operating expenses, but they directly affect your cash flow.

Many real estate investors target at least $100–$300 per unit per month in positive cash flow as a baseline threshold, though this varies widely by market and property type. More sophisticated investors focus on cash-on-cash return (aiming for 6–12%) rather than a fixed dollar amount. Negative cash flow properties can still build wealth through appreciation, but they require capital reserves to sustain.

Most conventional lenders require 15–25% down for investment properties, compared to 3–20% for primary residences. A larger down payment lowers your monthly mortgage, improving cash flow, but reduces your cash-on-cash return if the freed-up capital could be deployed elsewhere. Many investors put down the minimum required to preserve capital for additional investments or a repair reserve.