Inputs
Example data table
| Scenario | Purchase | Rent | Vacancy | Annual NOI | Cap rate | Cash-on-cash |
|---|---|---|---|---|---|---|
| Baseline | $150,000 | $750/mo | 7% | $6,840 | 4.56% | 6.10% |
| Higher rent | $150,000 | $850/mo | 7% | $8,004 | 5.34% | 7.55% |
| More expenses | $150,000 | $750/mo | 10% | $5,820 | 3.88% | 4.90% |
Formulas used
- Effective Income = (Rent + Other Income) × (1 − Vacancy%).
- Operating Expenses = Management + Maintenance + Taxes + Insurance + HOA + Utilities.
- NOI = Effective Income − Operating Expenses.
- Cap Rate = Annual NOI ÷ Purchase Price.
- Mortgage Payment uses standard amortization (monthly annuity).
- Cash Flow = NOI − Debt Service.
- Cash-on-Cash ROI = Annual Cash Flow ÷ Initial Investment.
- Total ROI = Total Profit ÷ Initial Investment, including sale proceeds.
- IRR solves the discount rate where NPV of cash flows equals zero.
How to use this calculator
- Enter the purchase price, closing costs, and renovation budget.
- Choose all-cash or enable the mortgage option.
- Add rent, vacancy, and operating expense assumptions.
- Set holding period, appreciation, rent growth, and selling costs.
- Click Calculate ROI to view results above the form.
- Download CSV or PDF to keep a quick report.
FAQs
1) What does ROI mean for rental property?
It measures profit compared to your cash invested. This tool includes cash flow plus estimated sale proceeds, net of costs and loan payoff.
2) What is cap rate used for?
Cap rate compares annual NOI to purchase price. It helps compare properties across markets, independent of financing assumptions.
3) Why is vacancy applied to income?
Vacancy reduces collectable rent. Using a vacancy assumption avoids overstating returns and supports realistic stress-testing.
4) What counts as operating expenses?
Typical items include management, maintenance, taxes, insurance, HOA, and paid utilities. Loan payments are separated as debt service.
5) Is cash-on-cash ROI better than total ROI?
They answer different questions. Cash-on-cash focuses on annual cash flow versus cash invested. Total ROI adds appreciation and sale outcomes.
6) How is IRR different from ROI?
IRR accounts for timing of cash flows, not just total profit. It is useful when comparing investments with different holding periods.
7) Why might IRR show N/A?
Some cash-flow patterns do not produce a stable solution. Extreme inputs, negative income, or unusual sale assumptions can cause this.
8) Can I use this for short-term rentals?
Yes, but adjust rent, vacancy, and expense rates. Short-term rentals often have higher income and higher operating costs.