Analyze a rental property investment with full ROI projections. Factor in purchase costs, mortgage, rental income, expenses, appreciation, and tax benefits to see your cash-on-cash return, total ROI, and projected equity over time.
Rental property returns come from four distinct sources: cash flow (rent minus expenses minus debt service), principal paydown (each mortgage payment builds equity), appreciation (the property generally rises in value over time), and tax benefits (depreciation deductions, deductible expenses). A successful rental investment usually wins on at least two of the four; great ones win on all four simultaneously.
The math is more involved than for stocks. You're modeling a leveraged purchase (typically 75–80% financed with a mortgage), an income stream with vacancy and operating expense drag, a long-term capital appreciation assumption, and tax treatment that differs from any other asset class. Cash-on-cash return — annual pre-tax cash flow divided by total cash invested — is the standard "how am I doing this year?" metric. Total ROI — cash flow plus principal paydown plus appreciation, all divided by cash invested — is the bigger-picture annualized measure.
This calculator combines all four return components into a multi-year projection. Enter the purchase, financing, income, expense, appreciation, and hold-period assumptions, and it returns cash-on-cash return, projected equity, and the total annualized return. Use it to evaluate prospective deals, to test how sensitive a deal is to assumptions (especially rent and vacancy), and to compare across markets and property types. Real rental returns vary widely with market, financing terms, property condition, and management quality — treat the output as a structured estimate, not a guarantee.
$250,000 purchase, 25% down ($62,500), $6,000 closing, 7% rate, $1,950/mo rent, 5% vacancy, $475/mo expenses, 3% appreciation, 10-year hold. Loan: $187,500. Annual P&I: ≈ $14,970. Gross income: 1,950 × 12 × 0.95 = $22,230 NOI: 22,230 − 5,700 = $16,530 Cash flow: 16,530 − 14,970 = $1,560/yr Cash-on-cash: 1,560 / 68,500 ≈ 2.3% Year 10 equity: $250K × 1.03^10 ≈ $336,000, less $161,000 remaining loan = $175,000 equity. Total return: $175,000 − $68,500 + $15,600 cumulative cash flow ≈ $122,100 on $68,500 invested. Annualized: ≈ 8.0% Decent but not spectacular. The property essentially pays for itself; appreciation and paydown create the real return.
$180,000 purchase, 25% down ($45,000), $5,000 closing, 7% rate, $1,800/mo rent (1% of purchase price), 8% vacancy, $475/mo expenses, 2% appreciation, 10-year hold. Loan: $135,000. Annual P&I: ≈ $10,780. Gross income: 1,800 × 12 × 0.92 = $19,872 NOI: 19,872 − 5,700 = $14,172 Cash flow: 14,172 − 10,780 = $3,392/yr Cash-on-cash: 3,392 / 50,000 ≈ 6.8% Year 10 equity: $180K × 1.02^10 = $219,400, less $116,000 remaining loan = $103,400. Total return: $103,400 − $50,000 + $33,920 cumulative cash flow = $87,320 on $50,000 invested. Annualized: ≈ 11.8% This is the "old-school" rental investing playbook — buy in lower-priced markets where rents support the price. Lower appreciation, much higher current cash flow.
$500,000 purchase in a high-growth metro, 25% down ($125,000), $10,000 closing, 7% rate, $2,800/mo rent, 5% vacancy, $1,200/mo expenses, 5% appreciation, 10-year hold. Loan: $375,000. Annual P&I: ≈ $29,940. Gross income: 2,800 × 12 × 0.95 = $31,920 NOI: 31,920 − 14,400 = $17,520 Cash flow: 17,520 − 29,940 = −$12,420/yr (negative) Cash-on-cash: negative every year — you're subsidizing the property. But: 5% appreciation over 10 years → property worth $814,000. Less $323,000 remaining loan = $491,000 equity. Total return: $491,000 − $135,000 − $124,200 cumulative negative cash flow = $231,800 on $135,000 invested. Annualized: ≈ 13.8% This is the "bet on appreciation" strategy — you write checks every year hoping the market keeps rising. Real risk: if appreciation stalls or reverses, you've subsidized a money-losing operation. Most experienced investors avoid this profile.
Use this calculator before making an offer on a rental property, when evaluating multiple potential deals, or when refinancing or selling an existing rental. The output transforms the question "is this a good deal?" from gut feel into a structured comparison.
It's most useful as a sensitivity tool. Run the same property at: (1) the rent you hope to get vs. the rent that comparable rentals actually fetch, (2) realistic vacancy vs. zero vacancy, (3) honest maintenance reserves (1–2% of value per year is typical) vs. wishful thinking, (4) conservative appreciation vs. recent-trend extrapolation. Deals that only work under optimistic assumptions usually don't work at all.
Pair this calculator with: the cap-rate calculator (the standard quick-screen for whether a property is even in the ballpark), the mortgage-payment calculator (to size the debt payment), the property-tax calculator (often the biggest line item in monthly expenses), and the home-equity calculator (when tapping equity to fund the down payment).
A few real-world realities the calculator can't capture: tenant quality (the difference between a great tenant and a problematic one is enormous), repairs that come in lumps (a $12,000 roof replacement in year 4 wipes out 2–3 years of cash flow), interest rate risk if you used a short-term ARM, and the operational time cost — managing the property is real work even if you outsource it. For first-time investors, an honest budget for surprises and the cost of your own attention should be added on top.
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Project how your rent will increase over time with annual rent hikes.
Tax, insurance, maintenance, management
Monthly Cash Flow
$-7
Cash-on-Cash Return
-0.1%
Total ROI
152.1%
End Property Value
$403,175
| Year | Cash Flow | Property Value | Equity | Total ROI |
|---|---|---|---|---|
| 1 | $-83.17 | $309,000.00 | $86,285.57 | 3.86% |
| 2 | $-83.17 | $318,270.00 | $98,006.37 | 17.88% |
| 3 | $-83.17 | $327,818.10 | $110,182.43 | 32.45% |
| 4 | $-83.17 | $337,652.64 | $122,834.92 | 47.59% |
| 5 | $-83.17 | $347,782.22 | $135,986.15 | 63.34% |
| 6 | $-83.17 | $358,215.69 | $149,659.70 | 79.71% |
| 7 | $-83.17 | $368,962.16 | $163,880.48 | 96.74% |
| 8 | $-83.17 | $380,031.02 | $178,674.81 | 114.47% |
| 9 | $-83.17 | $391,431.96 | $194,070.53 | 132.92% |
| 10 | $-83.17 | $403,174.91 | $210,097.05 | 152.13% |