Property ROI Calculator
Calculate total return on investment (ROI) for a rental property including rental income and capital appreciation.
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How to use this calculator
Total gain combines cumulative net rental cash flow over the holding period plus the property's capital appreciation. This is divided by the down payment (cash invested) to give ROI as a percentage.
- 1
Enter the purchase price and your down payment — the down payment is your initial cash invested and the basis for ROI.
- 2
Input monthly rent collected and total monthly expenses including mortgage, property tax, insurance, and maintenance.
- 3
Set how many years you plan to hold the property and the expected annual appreciation rate in your market.
Frequently asked questions
What formula does this tool use for total ROI?
This tool uses ROI = (net cash flow over the holding period + appreciation gain) ÷ down payment × 100. Net cash flow is (monthly rent − monthly expenses) × 12 × years, and appreciation gain is purchase price × (1 + appreciation %)^years − purchase price.
How is annualized ROI computed?
Annualized ROI = ((1 + ROI ÷ 100)^(1 ÷ years) − 1) × 100, a compound rate. If the total gain loses the whole down payment or more, the tool shows −100% rather than an undefined number, and with no down payment it shows 0.
What is cash-on-cash return in this tool?
It is annual cash flow ÷ down payment × 100, using only the rent-minus-expenses part and ignoring appreciation. On the defaults, $4,800 a year over $70,000 is 6.86%. It uses the down payment only, so closing costs and renovation spending you paid in cash are not in the denominator.
What belongs in the monthly expenses field?
Everything you pay out each month to keep the property, usually the mortgage payment, property tax, insurance and maintenance. Because the full payment is treated as an expense, the part that repays loan principal is counted as a cost here and is not credited back as equity, which understates the return of a leveraged purchase.
Are selling costs, taxes and closing costs included?
No. The appreciation gain is paper value change with no commission or closing costs deducted at sale, and there is no income tax, depreciation or capital-gains treatment. Rent and expenses are held flat for every year.
Why can ROI be high when cash flow is negative?
Because the two parts are added together. With $2,500 of monthly expenses, 10 years and 3% appreciation, cash flow is −$36,000 over the period but appreciation adds $120,371, giving a total gain of $84,371 and a 120.53% ROI on the down payment. That result depends entirely on the appreciation assumption holding.
What if the down payment is zero?
ROI, annualized ROI and cash-on-cash all show 0.00%, since a return on nothing invested cannot be expressed as a percentage.
Does the tool predict appreciation?
No. The appreciation rate is whatever you type, compounded yearly on the purchase price. The tool offers no market data and no suggested rate, so test a few values including zero.
Property ROI: cash flow plus appreciation over your down payment
What the percentage is measuring
The headline ROI divides total gain by the down payment. Total gain has two parts: the cumulative rent-minus-expenses over the years held, and the rise in value from compounding the annual appreciation rate on the purchase price. With the defaults ($350,000 price, $70,000 down, $2,200 rent, $1,800 expenses, five years, 4% appreciation) cash flow is $400 a month, $4,800 a year and $24,000 over five years. Appreciation adds $75,829, total gain is $99,829, ROI is 142.61% and annualized ROI is 19.39%.
Worked example: taking appreciation out
Setting annual appreciation to 0 removes the appreciation gain and leaves only the $24,000 of cash flow. Total gain falls from $99,829 to $24,000, ROI from 142.61% to 34.29%, and annualized ROI from 19.39% to 6.07%. Cash-on-cash return stays at 6.86%, because it never included appreciation. The comparison shows that, in the default case, most of the headline return comes from an assumption about price growth rather than from rent.
Worked example: negative cash flow over ten years
Raise the monthly expenses to $2,500 and hold for ten years at 3% appreciation. Monthly cash flow becomes −$300, annual −$3,600 and −$36,000 over the decade. Appreciation gain is $120,371, so total gain is $84,371 and ROI on the down payment is 120.53%, or 8.23% annualized. Cash-on-cash return is −5.14%. A strong total figure can hide a property that costs money to hold every month, which is why both numbers are shown.
| Scenario | Net cash flow | Appreciation gain | Total gain | ROI | Annualized | Cash-on-cash |
|---|---|---|---|---|---|---|
| Defaults, 5 years, 4% appreciation | $24,000 | $75,829 | $99,829 | 142.61% | 19.39% | 6.86% |
| Defaults, 0% appreciation | $24,000 | $0 | $24,000 | 34.29% | 6.07% | 6.86% |
| $2,500 expenses, 10 years, 3% | -$36,000 | $120,371 | $84,371 | 120.53% | 8.23% | -5.14% |
Why the down payment is the denominator
Dividing by the down payment measures return on the cash you put in, not on the whole price, which is how borrowing magnifies both gains and losses. The tool does not subtract the loan balance at the end, add closing costs to the cash invested, or deduct selling costs from the gain, so the percentage is best read as a comparison between assumptions rather than a forecast of money in hand.
Treating the loan payment honestly
The expenses field is a single monthly total, and anything you put in it is treated as a cost. If it includes the full mortgage payment, the principal portion reduces cash flow even though it is building equity you would eventually recover. Keep that in mind when comparing the result with a calculation that handles equity separately.
Learn more from an authoritative source:
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →