Free rental property ROI calculator — calculate cash flow, cap rate, and return on investment
This free rental property ROI calculator (also a return on investment rental calculator) helps you figure out if a rental property is a good investment. It calculates your cash flow, cap rate, and cash-on-cash return — the three most important metrics for real estate investors.
Real estate is one of the best ways to build wealth, but not every rental property is a good deal. Use this calculator before you buy to make sure the numbers work.
A quick rule of thumb: the monthly rent should be at least 1% of the purchase price. So a $300,000 property should rent for at least $3,000/month. If it doesn't, the numbers probably don't work.
A good cash-on-cash return is 8-12% or higher. Cap rate should be 5-10%. Anything below 5% cap rate means you're overpaying for the property.
Plan on 1-2% of the property value per year for maintenance. For a $300,000 property, that's $3,000-6,000 per year. Also budget 5-10% for vacancy.
Cash flow is king — you want the property to pay for itself every month. Appreciation is a bonus. Never buy a rental property expecting it to appreciate; buy it because the cash flow works.
Most lenders require 20-25% down for investment properties. Plus closing costs (2-5%) and reserves (3-6 months of expenses). For a $300,000 property, plan on $80,000-100,000 total.
If you're new or out of state, yes — a property manager costs 8-12% of rent but saves you headaches. If you live nearby and are handy, self-managing can save you money.