Rental Property ROI Calculator
Analyze any rental property deal in seconds. Get cash flow, cap rate, cash-on-cash return, NOI, DSCR, and more — all in one place.
A higher purchase price does not always mean a worse deal — and a cheaper property is not always a better one. This calculator runs the full investment analysis so you can compare properties on the numbers that actually matter to real estate investors.
Property
Financing
Income
Expenses
Monthly Cash Flow
Annual Cash Flow
Cash-on-Cash Return
Cap Rate
Net Operating Income
Gross Rent Multiplier
DSCR
Operating Expense Ratio
Break-Even Occupancy
Monthly Income Breakdown
Monthly Expense Breakdown
Initial Investment
5-Year Projection
Understanding the Key Metrics
Cash-on-Cash Return
The annual cash flow divided by the total cash you invested (down payment plus closing costs). The most important metric for leveraged real estate. Most investors target 6-10% or higher.
Cap Rate
Net operating income divided by purchase price. Measures a property’s return independent of financing. Useful for comparing properties and markets. A 5-8% cap rate is typical in most markets.
Net Operating Income (NOI)
Annual gross rent minus vacancy minus all operating expenses, before debt service. The fundamental measure of a rental property’s earning power. Does not include mortgage payments.
Debt Service Coverage Ratio (DSCR)
NOI divided by annual debt service (mortgage plus PMI). Most lenders require a DSCR of 1.25 or higher for investment property loans. Below 1.0 means the property cannot cover its own debt payments from rent alone.
Gross Rent Multiplier (GRM)
Purchase price divided by annual gross rent. A quick screening tool — lower is generally better. A GRM of 10 means you are paying 10 years of gross rent for the property. Compare GRMs within the same market.
Operating Expense Ratio (OER)
Operating expenses divided by gross revenue. Measures what percentage of income goes to running the property. A healthy OER is typically 35-50%. Above 60% usually indicates the property is overexpensed or underrented.
Break-Even Occupancy
The occupancy rate needed to cover all expenses including debt service. If break-even is 85%, the property covers all costs when occupied 85% of the time. Lower is better — gives you more cushion for vacancies.
Cash Flow
What actually lands in your pocket each month after paying every expense — mortgage, taxes, insurance, management, maintenance, CapEx reserves, and vacancy. The only metric that matters for day-to-day landlord survival.
How to Analyze a Rental Property
Step 1 — Start with NOI. Calculate net operating income by taking gross annual rent, subtracting vacancy, and subtracting all operating expenses (taxes, insurance, HOA, maintenance, CapEx, management). Do not include the mortgage in this calculation. NOI tells you what the property earns independent of how you finance it.
Step 2 — Calculate the cap rate. Divide NOI by the purchase price. This lets you compare properties regardless of financing. A $400,000 property with $24,000 NOI has a 6% cap rate. Compare this to other properties and your local market average.
Step 3 — Add debt service and check cash flow. Subtract your monthly mortgage payment (and PMI if applicable) from the effective gross income minus operating expenses. Positive means you are making money monthly. Negative means you are subsidizing the property out of pocket.
Step 4 — Calculate cash-on-cash return. Divide annual cash flow by your total cash invested (down payment plus closing costs). This is your actual return on the money you put in. Compare to what that money could earn elsewhere.
Step 5 — Check the DSCR. Divide NOI by annual debt service. If you plan to use a DSCR loan, most lenders require 1.25 or higher. If you are using a conventional loan, your lender will qualify you based on your personal income, but DSCR still tells you how well the property covers itself.
What Makes a Good Rental Property?
The 1% Rule is a screening tool, not a decision
The 1% rule says monthly rent should equal at least 1% of the purchase price. A $300,000 property should rent for $3,000 per month. It is a quick screen to filter out obviously bad deals — but markets where the rule applies are increasingly rare. Use this calculator to run the actual numbers instead of relying on rules of thumb.
Budget CapEx separately from maintenance
Maintenance is routine — fixing a leaky faucet, painting between tenants. CapEx is capital expenditures: replacing the roof, HVAC, water heater, or appliances. Many new investors budget only for maintenance and get blindsided by a $12,000 roof. Budget 5-10% of gross rents for CapEx on older properties.
Vacancy is not optional
Even great properties sit empty between tenants. Budget at least 5% vacancy even in tight rental markets — that is less than one month per year. In softer markets or with C-class properties, budget 8-10%. An investor who plans for 100% occupancy is not planning.
Cash flow protects you; appreciation rewards you
Do not buy a cash-flow negative property betting on appreciation. Appreciation is unpredictable and cyclical. Cash flow pays your mortgage when the market turns. Appreciation is a bonus, not a strategy. If a property only works because values will go up, the deal does not work.
The numbers that matter change by market
A 4% cap rate is acceptable in San Francisco; it is a bad deal in Memphis. A GRM of 15 might be fine in a high-appreciation coastal market and terrible in the Midwest. Context matters. Always compare metrics to other properties in the same market, not to national averages.