Rental Property ROI Calculator
Rental property ROI calculator. Monthly cash flow, cash-on-cash return, cap rate, gross rental yield, total ROI (cash flow + principal paydown + appreciation). The complete real estate investor analysis.
Rental Property ROI Calculator
Annual P&L
| Annual rent | — |
| − Vacancy | — |
| − Property tax | — |
| − Insurance | — |
| − Maintenance | — |
| − Management | — |
| − HOA | — |
| = Net Operating Income (NOI) | — |
| − Mortgage | — |
| = Annual cash flow | — |
Total return components
| Year-1 cash flow | — |
| + Year-1 principal paydown | — |
| + Year-1 appreciation | — |
| ÷ Total cash invested | — |
| = Total ROI (year 1) | — |
Key metrics
| Gross rental yield | — |
| Operating expense ratio | — |
| Monthly mortgage P&I | — |
How to use the rental property ROI calculator
Enter purchase price + financing
Total purchase price + down payment (typically 25% for rental loans vs 20% for owner-occupied). Mortgage rate for rental properties is usually 0.5-1.0% higher than owner-occupied. Closing costs ~2-3% of price. Rehab budget for "make-ready" repairs before tenants move in.
Enter rent + operating expenses
Monthly rent (from comps or current lease). Annual property tax + insurance (request from listing agent). Vacancy % (5-10% typical for stable neighborhoods, 10-15% for problem areas). Management fee (8-12% if hired; 0 if self-managing). Maintenance reserve (5-10% of rent). HOA if applicable.
Enter appreciation assumption
Long-run US home prices grow ~3% annually. Aggressive markets (Sun Belt boom): 5-8%. Sluggish markets (Rust Belt, declining secondary cities): 0-2%. Use Case-Shiller for your specific MSA for historical context. Don't assume the recent 5-year run-up of 6-10%/year repeats — that was unusual.
Read the four headline metrics
Monthly cash flow: rent minus all expenses. Cash-on-cash: annual cash flow ÷ total cash invested. 6-12% is typical for solid deals. Cap rate: NOI ÷ purchase price; measures property yield independent of financing. Total ROI: cash flow + principal paydown + appreciation, all divided by cash invested. Often 12-25% for leveraged real estate even when cash-on-cash is modest.
Compare to the 1% rule + alternatives
The 1% rule: monthly rent should be ≥ 1% of purchase price. Most major-city properties fail this rule now — but appreciation can compensate. Compare total ROI to: S&P 500 (~10% historical), REITs (8-12%), high-yield savings (4-5%), bonds (5-7%). Real estate adds: leverage amplification, tax benefits, inflation hedge, tangible asset.
Rental property ROI — the four metrics that matter most
Analysing rental property properly means looking at four interrelated metrics. Monthly cash flow: the dollar amount left after all expenses + mortgage. Positive = the property pays you each month. Cash-on-cash return (CoC): annual cash flow as a % of cash invested. The most-cited rental metric; 8-12% is typical for solid deals. Cap rate: NOI as a % of purchase price, ignoring financing. Used by professional commercial investors to compare properties independent of leverage. Total ROI: cash flow + principal paydown + appreciation ÷ cash invested. The complete picture including the often-overlooked "forced savings" of mortgage paydown and the price appreciation. Total ROI on leveraged real estate is often 15-25% per year — outpacing public-market returns despite seemingly low cash-on-cash.
The 50% rule + 1% rule heuristics
Two classic rules of thumb. The 50% rule: roughly 50% of gross rent gets eaten by operating expenses (excluding mortgage). Useful sanity check — if your projected opex is much below 50%, you\'re probably underestimating maintenance, vacancy, or management. The 1% rule: monthly rent should be at least 1% of the purchase price. A $300K property should rent for $3,000+/month to "pass" the 1% rule. In high-appreciation markets (Bay Area, Seattle, NYC), the 1% rule is impossible to satisfy — properties trade at 0.4-0.6% rent-to-price. In affordable Sun Belt markets, 1%+ is achievable. The rule is a quick screen; it doesn\'t mean failing properties are bad investments, just that you\'re betting more on appreciation than cash flow.
Most cash-on-cash rental analyses leave out three of four return components: principal paydown, appreciation, tax benefits. Cash-on-cash of 4% sounds bad until you add 3% paydown + 3% appreciation + 1% tax shield = 11% total ROI. Real estate math is complicated.
The hidden return drivers
Cash-on-cash alone understates rental property returns. Principal paydown: every monthly mortgage payment includes principal, which is effectively "forced savings" you build to equity. On a $260K loan at 7.5% / 30 years, year-1 principal is ~$3,200 — 1.3% of price. Appreciation: home prices historically grow 3% per year long-term; on a $350K property, that\'s $10,500/year in equity growth. Tax benefits: rental income tax-shielded by depreciation (27.5-year straight-line), interest deduction, opex deductions. Total tax savings can equal 1-2% of property value annually for high-bracket investors. Combine these and the "total return" picture is far brighter than monthly cash flow alone.
ASEAN rental market context
Rental yields vary by region. Singapore: residential rental yields typically 2.5-4% gross — low yields due to high property prices, but stable + strong tenant pool. Malaysia: 4-7% gross rental yields, more variation by location. Indonesia: 4-8% gross — emerging-market yield premium. Thailand: 4-6%. Vietnam: 5-9% in major cities. Hong Kong: 2-3% — among the lowest globally due to extreme property prices. Australia: 4-6% in capital cities. ASEAN real estate investors typically prioritise capital appreciation over yield, since yields struggle to beat alternative investments locally.
10 Things to Know About Rental ROI
4 metrics: monthly cash flow, cash-on-cash, cap rate, total ROI. Each tells a different story.
1% rule: monthly rent ≥ 1% of price. Classic rental screen — fails in expensive coastal markets, works in Sun Belt.
50% rule: ~50% of gross rent goes to opex (excl. mortgage). Sanity check for underestimated expenses.
Cap rate = NOI / price. Used by commercial investors. 5-8% typical residential; 6-10% commercial.
Rental loans require 25-30% down (vs 20% owner-occupied) and rates 0.5-1% higher.
Vacancy + maintenance almost always underestimated. Use 5-10% vacancy + 5-10% maintenance minimum.
Total ROI on leveraged real estate ~12-25%/yr. Cash flow only is the smallest component.
Depreciation deduction: 27.5-year straight-line for residential. Shelters rental income from tax.
"Cash flowing" is often a misleading frame. A property with $200/mo cash flow can have $20,000/yr total ROI.
ASEAN rental yields: SG 2.5-4%, MY 4-7%, ID 4-8%, HK 2-3%, AU 4-6%. Lower than US averages.
Frequently asked questions
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Depends on market + your alternatives. 4-6%: typical for expensive coastal markets (CA, NY, MA) — appreciation does the heavy lifting. 8-12%: solid for stable markets (TX, GA, NC, OH). 12-20%: aggressive markets with high yields (turnkey rentals, mobile homes, small multifamily). Above 20%: usually indicates problem properties (deferred maintenance hidden, declining neighborhoods, problem tenant base) — verify carefully. Compare to alternatives: S&P 500 ~10% long-term, REITs 8-12%, HYSA 4-5%.
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Common omissions: (1) CapEx reserve — major repairs (roof, HVAC, water heater) every 10-20 years. Budget $50-200/month. (2) Tenant turnover — paint, cleaning, screening for new tenants ($500-2,000 per turnover, 30-50% of properties annually). (3) Legal fees — eviction, lease disputes ($500-5,000 occasionally). (4) Utilities for vacancy periods + common areas. (5) Property management software, rent collection fees, accountant fees. Most new landlords underestimate by 1-3% of rent annually.
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Yes, indirectly via tax savings. Depreciation is a non-cash deduction that reduces taxable rental income. For US residential rental: 27.5-year straight-line on building value (excludes land, typically 80% of price). Annual depreciation = building value / 27.5. For a $350K property with $280K building portion: $10,182 annual depreciation. At 32% marginal tax: ~$3,260/year tax savings. Catch: depreciation recapture at sale taxes you on accumulated depreciation at 25%. The benefit is deferral + lower marginal rates if you eventually 1031-exchange or hold to estate.
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Notoriously hard to predict. US long-term: ~3% real / 5% nominal. Recent boom (2020-2024): 8-12%/year in many markets — unsustainable. Use Case-Shiller national index for benchmarks; local MSA-level Case-Shiller for your specific market. Conservative analysis: use 3% nominal or 0% real. Aggressive: use recent local 5-year CAGR but acknowledge mean-reversion risk. Don\'t base buy decisions on aggressive appreciation assumptions — let cash flow + paydown carry the ROI.
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Cap rate = NOI / purchase price. Ignores financing. Used by commercial investors to compare properties independent of leverage decision. A 7% cap rate is a 7% cap rate whether you pay all cash or 75% LTV. Cash-on-cash = annual cash flow / cash invested. Reflects leverage. Same property has different CoC depending on how much you put down. With high leverage, CoC can be much higher (or negative) than cap rate. For comparing properties: cap rate. For comparing your specific deal: cash-on-cash + total ROI.
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Depends on your time, distance, scale. Self-manage if: property is local (within 1-hour drive), you have time (3-10 hours/month per door), you\'re willing to learn landlord-tenant law. Hire manager if: property is distant, you have other commitments, you have multiple properties (manager fees become economical at 5+ doors). Management costs 8-12% of rent typically. Even with manager fees, properties usually still cash flow positive — the question is whether your time is worth more elsewhere.
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Increasingly hard to satisfy. In 2010 most US markets passed 1% easily; in 2024 only the cheapest secondary markets do. SF, NYC, LA, Boston all trade at 0.4-0.6% rent-to-price. The 1% rule is now a "screen for cash-flowing markets" rather than "screen for good deals". If you\'re in a high-appreciation market, accept lower yield in exchange for capital appreciation. If you\'re in a stable lower-cost market, 1%+ is still achievable and gives strong cash-on-cash returns.
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Roughly — but with caveats. STR economics differ: higher gross rent (often 2-3× LTR), but much higher expenses (cleaning $50-200/turn × 10-20 turns/month, supplies, furnishings $20-30K upfront, management fees 20-30%, occupancy ~50-70%, more wear-and-tear). Use this calculator with: monthly rent = average occupancy × nightly rate × 30; vacancy = 30-50%; maintenance 10-15%; management 20-30%. Many STR markets are saturating; check Airbnb data via AirDNA before assuming high occupancy.
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No. All inputs stay in your browser. ROI computations run entirely client-side. Open DevTools → Network when you click Analyse and you\'ll see zero outbound requests.
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Standard texts: Frank Gallinelli, What Every Real Estate Investor Needs to Know About Cash Flow. David Greene, Long-Distance Real Estate Investing. BiggerPockets (biggerpockets.com) — large free + paid community + podcast. Brandon Turner, The Book on Rental Property Investing. ASEAN-specific: PropertyGuru Singapore + Malaysia, Rumah123 Indonesia, Asia Property Awards for regional comparisons.
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