What is a good ROI for rental property?

A good cash-on-cash return is 8-12%. Cap rates of 5-10% are typical depending on location. Higher returns often come with higher risk or more management.

What is the difference between Cap Rate and Cash-on-Cash Return?

Cap Rate assumes all-cash purchase. Cash-on-Cash Return accounts for financing and shows actual return on your invested cash.

What expenses should I include?

Include property tax, insurance, HOA fees, maintenance (1-2% of property value), property management (8-10% of rent), and vacancy losses (5-10%).

What is a good vacancy rate to estimate?

Use 5-10% for most markets. Lower (3-5%) for strong rental markets, higher (10-15%) for less stable areas or seasonal rentals.

Housing Calculators

Real Estate Investment Calculator

Calculate rental property cash flow from income and expenses with investment metrics. Features cap rate, cash-on-cash return, and monthly net income calculations including gross rent multiplier, internal rate of return (IRR), total ROI projections, vacancy allowances, and appreciation.

How to Use the Real Estate Investment Calculator

Use the Real Estate Investment Calculator to rental property cash flow from income and expenses with investment metrics. Features cap rate, cash-on-cash return, and monthly net income calculations including gross rent multiplier, internal rate of return (IRR), total ROI projections, vacancy allowances, and appreciation.. Enter your values to get accurate, instant results tailored to your situation.

Free housing calculators for rent vs buy, home affordability, moving costs, and more. Make your housing decisions wisely.

Common Uses

Calculate real accurately and instantly
Calculate estate accurately and instantly
Calculate investment accurately and instantly
Calculate cash accurately and instantly
Calculate flow accurately and instantly

Related Calculators

More Housing Calculators

Browse all 311+ free online calculators

Real Estate Investment Guide

Analyze rental properties

Expert Tips

The 1% Rule for Quick Analysis: Monthly rent should be at least 1% of purchase price. $200K property should rent for $2,000+/month. Properties meeting this rule typically cash flow positively. It's a quick filter—still do full analysis on promising deals.
Cash-on-Cash Return is Key: Calculate annual cash flow ÷ total cash invested. $50K down payment generating $6K/year cash flow = 12% cash-on-cash return. Target 8-12%+ for residential rentals. This measures return on YOUR money, not the property's total value.
Budget 50% of Rent for Expenses: The 50% rule: Half of gross rent goes to expenses (taxes, insurance, maintenance, vacancy, management). $2,000 rent = $1,000 for expenses, $1,000 for mortgage + cash flow. Use this for quick analysis before detailed underwriting.
Location Over Property Condition: You can fix a bad property, but you can't move it. Good school districts, low crime, job growth, and population growth drive appreciation and tenant quality. A B-class property in A-class area often beats A-class property in C-class area.

Essential Fundamentals — Investment metrics

Key Investment Numbers

Cap Rate: Net Operating Income ÷ Property Value. $200K property with $16K NOI = 8% cap rate. Higher cap rate = higher returns but often more risk. Class A areas: 4-6%. Class B: 6-8%. Class C: 8-12%+. Use to compare properties regardless of financing.
Net Operating Income (NOI): Gross rent minus operating expenses (taxes, insurance, maintenance, management, vacancy). Does NOT include mortgage payments. NOI drives property value and determines if deal works before financing considerations.
Debt Service Coverage Ratio: NOI ÷ Annual Mortgage Payment. Lenders want 1.25+ (NOI 25% higher than mortgage). $16K NOI with $12K mortgage = 1.33 DSCR. Below 1.0 means negative cash flow—you're losing money each month.

Advanced Strategies — Maximize returns

Investment Optimization

Leverage Amplifies Returns: 20% down on $200K property ($40K) with 10% total return = $20K gain on $40K investment = 50% return. But leverage also amplifies losses. Ensure cash flow covers mortgage with margin for vacancies and repairs.
Value-Add Opportunities: Properties below market rent, needing cosmetic updates, or with unused space offer forced appreciation. Raise rents $200/month = $2,400/year NOI increase. At 8% cap rate, that's $30K added property value from a $5K renovation.

Frequently Asked Questions

What is a good ROI for rental property?: A good cash-on-cash return is 8-12%. Cap rates of 5-10% are typical depending on location. Higher returns often come with higher risk or more management.
What is the difference between Cap Rate and Cash-on-Cash Return?: Cap Rate assumes all-cash purchase. Cash-on-Cash Return accounts for financing and shows actual return on your invested cash.
What expenses should I include?: Include property tax, insurance, HOA fees, maintenance (1-2% of property value), property management (8-10% of rent), and vacancy losses (5-10%).
What is a good vacancy rate to estimate?: Use 5-10% for most markets. Lower (3-5%) for strong rental markets, higher (10-15%) for less stable areas or seasonal rentals.