Rental Property ROI Calculator
Analyze a rental with the numbers investors use, the net operating income, monthly cash flow, cash-on-cash return, and cap rate.
Want to understand the concept, not just the number? Read The Real Estate Investing Guide .
How it's calculated
A rental only works if the numbers work. Four figures tell you almost everything. Net operating income is what the property earns after real costs but before the mortgage. Cash flow is what lands in your pocket each month once the loan is paid. Cash-on-cash return measures that cash flow against the actual money you put in. Cap rate measures the income against the price, so you can compare deals no matter how each is financed.
Take the default. A $300,000 rental with 25 percent down means a $225,000 loan and $75,000 down, plus $6,000 in closing costs and $10,000 in upfront repairs, so $91,000 of cash goes into the deal. It rents for $2,500 a month, which is $30,000 a year. Take out a 5 percent vacancy allowance and the property collects $28,500. Subtract property tax, insurance, a maintenance reserve, and management, which come to $8,700, and the net operating income is $19,800. That is a 6.6 percent cap rate on the price.
Now bring in the loan. The mortgage on $225,000 at 7 percent over 30 years runs about $1,496.93 a month, or $17,963 a year. Net operating income of $19,800 minus that debt service leaves $1,836.83 of cash flow a year, about $153 a month. Measured against the $91,000 you invested, that is a 2.02 percent cash-on-cash return. Thin, which is typical at today rates. Raise the rent, put less into repairs, drop management by self-managing, or find a lower price, and every one of these numbers improves. Use the advanced options to match a specific deal.
Assumptions
- Net operating income is the rent after vacancy minus operating expenses, and never includes the mortgage. Cash flow is that income minus the loan payment.
- Maintenance and management are taken as a share of the gross rent. Appreciation and tax benefits like depreciation are not counted here, so this is the pure cash view.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
What is a good cash-on-cash return on a rental?
Many buy-and-hold investors look for 8 percent or more, though what counts as good depends on the market, the rate environment, and how much appreciation you expect on top of the cash flow. In high-price or high-rate markets, returns are often thinner, so investors lean more on rent growth and appreciation.
What is the difference between cap rate and cash-on-cash return?
Cap rate is the net operating income divided by the price, and it ignores financing, so it measures the property itself. Cash-on-cash return divides the actual after-mortgage cash flow by the cash you invested, so it measures your return given how you financed the deal. A low-rate loan can lift cash-on-cash well above the cap rate.
What is net operating income?
It is the rent you collect after a vacancy allowance, minus operating expenses like tax, insurance, maintenance, and management. It stops before the mortgage payment, so two buyers looking at the same building get the same net operating income even if one pays cash and the other borrows.
Should I include property management if I manage it myself?
It is safer to include it, often 8 to 10 percent of rent, even if you self-manage today. Your time has value, and one day you may hand the property off. A deal that only cash flows because you work it for free is a job, not a passive return.
Does this account for appreciation and tax benefits?
No, and that is on purpose. This is the cash view, so you can see whether the property pays for itself. Appreciation, loan paydown, and depreciation add to your total return over time, but they are less certain than the monthly cash flow, so it is wise to make a deal work on cash first.