Real Estate ROI Calculator

Determine the profitability and yield of rental properties using Cap Rate and Cash-on-Cash returns.

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Cash-on-Cash ROI
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Cap Rate
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Total Cash Invested
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Formula / Calculation
Cash-on-Cash Return = Annual Cash Flow / Total Cash Invested

Metrics of Real Estate Investing

Unlike stocks, real estate uses heavy leverage (mortgages). This means calculating your return on investment requires looking not just at the total value of the house, but precisely how much of your own liquid cash is tied up in the deal versus the net income it generates.

Core ROI Concepts in Real Estate

Cash-on-Cash Return (CoC)

Measures the annual cash flow relative to the initial physical cash you pulled out of your bank account (down payment + closing costs + rehab). It ignores the mortage amount.

Cap Rate (Capitalization Rate)

Estimates the yield of a property over one year if you had bought the property 100% in cash (no mortgage). Used heavily to compare different deals in the same market.

Net Operating Income (NOI)

Your gross rental income minus all operating expenses (taxes, insurance, maintenance, property management)—excluding your mortgage principal/interest.

Maximizing Rental Profits

Ensure your cash flow actually accounts for Vacancy (typically 5-8%) and CapEx (roofs/HVAC replacement reserves, ~10%). Most novices ignore these and overestimate ROI.
Do not over-improve a rental property. The finishes should match the neighborhood tier, nothing more.
Use leverage responsibly. A lower down payment skyrockets your Cash-on-Cash ROI, but severely increases your monthly risk exposure if a tenant stops paying.

Frequently Asked Questions

What is a "good" Cash-on-Cash return?
While varying intensely by market and interest rates, most serious real estate investors target between 8% to 12% Cash-on-Cash return as an initial benchmark.
Why is my Cap Rate lower than CoC?
Because Cap Rate assumes you paid 100% cash. Leverage (a mortgage) boosts your CoC return because you are controlling a large asset with a small fraction of your own money.