Landlord ROI Calculator

Model cash flow, cap rate, and cash-on-cash return before you buy a rental property or adjust your rent.

Your details

Property tax, insurance, maintenance, HOA, etc.
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Calculating investment returns…

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Enter your details to see the result.

Understanding Your ROI Metrics

Cash-on-Cash Return

Measures annual cash flow against your down payment. Good returns are 8%+, excellent are 12%+.

Cap Rate

Shows property's potential return without financing. 6-8% is typical, 8%+ is excellent.

Gross Rent Multiplier

Lower numbers indicate better value. GRM under 15 is generally favorable.

Annual Cash Flow

Positive cash flow means income exceeds all expenses including mortgage.

How this calculator works

Annual cash flow = (monthly rent × 12) − annual mortgage P&I − operating expenses. Cap rate = (NOI ÷ purchase price) × 100. Cash-on-cash return = (annual cash flow ÷ down payment) × 100.

Inputs

  • Purchase price and down payment — sets equity invested and loan amount.
  • Monthly rent — gross scheduled rent, not effective rent after vacancy.
  • Annual expenses — taxes, insurance, maintenance, HOA, and management.
  • Interest rate and term — used to estimate monthly mortgage principal and interest.

Assumptions

  • Vacancy, turnover, and capital reserves are not subtracted unless you add them to expenses.
  • Mortgage payment covers principal and interest only (no escrow).
  • Property appreciation and tax benefits beyond cash flow are excluded.

Limitations

  • Not a substitute for a full pro forma or appraisal.
  • Local rent control, licensing, or short-term rental rules may cap income.
  • Interest rates and insurance costs change; rerun numbers before closing.

Example calculation

  1. Purchase price $300,000, 20% down ($60,000), 7% rate, 30-year loan.
  2. Monthly rent $2,200; annual operating expenses $6,000.
  3. Monthly P&I ≈ $1,597; annual mortgage ≈ $19,161.
  4. Annual cash flow ≈ $1,239 ($26,400 rent − $19,161 mortgage − $6,000 expenses); cap rate 6.8%.
  5. Cash-on-cash return ≈ 2.07%.
Result: ~2.07% cash-on-cash return, 6.8% cap rate

Cap rate ignores financing and shows property yield. Cash-on-cash reflects leveraged return on your down payment. Many investors target 8%+ cap rate or 8%+ cash-on-cash in stable markets.

Common mistakes

Understating maintenance and capex

Budget 1–2% of property value annually for repairs and replacements, plus turnover costs between tenants.

Using gross rent without vacancy

Even strong markets experience 5–8% vacancy. Reduce rent or increase expenses to stress-test the deal.

Ignoring property management fees

Self-management saves money but costs time. Add 8–10% of rent if you plan to hire a manager.

Frequently asked questions

  • Many investors look for 6–10% depending on market risk, though hot markets may accept lower cap rates for appreciation potential.

  • It measures annual pre-tax cash flow divided by cash invested (down payment and closing costs). It shows leveraged yield.

  • No—this calculator focuses on operating cash flow. Depreciation affects taxes but is a non-cash deduction.

  • If your down payment is under 20%, add PMI to annual expenses for a realistic cash flow picture.

  • Higher rates increase mortgage payments, reducing cash flow and cash-on-cash return even if rent stays flat.

  • GRM = purchase price ÷ annual gross rent. Lower GRM can indicate better relative value, but it ignores expenses.

Disclaimer

LeaseCraft provides document automation and general information — not legal, tax, or financial advice. Calculator results are estimates for planning only. Consult a licensed attorney, accountant, or housing counselor for advice about your situation.