Rental Property ROI Calculator

The four numbers, and who cares about each

They answer different questions, which is why the same deal can look strong on one and weak on another.

• Cap rate — NOI divided by price. Ignores financing entirely, which is exactly what makes it useful for comparing two properties against each other.
• Cash-on-cash — annual cash flow divided by the cash you actually put in. This is the return on your money, not the property's.
• DSCR — NOI divided by debt service. This is the lender's number. Below 1.0 the property does not cover its own loan; many lenders look for a comfortable margin above that.
• Rent to price — a screening heuristic, not an analysis. Useful for discarding obvious non-starters quickly and nothing more.

Where projections are usually oversold

Almost every optimistic pro forma has the same three holes:

1. No vacancy allowance. Assuming twelve months of rent every year is assuming no tenant ever leaves and no unit ever sits empty between them.
2. No capital expenditure. Roofs, HVAC systems and water heaters do not show up in monthly maintenance, but they arrive eventually and they are large. The maintenance percentage here is meant to cover both routine repairs and the reserve for those.
3. No management cost. If you self-manage you are not saving that money — you are earning it. Leave the percentage in so the numbers still work on the day you stop wanting the job.

What this calculator does not include

Appreciation, principal paydown, depreciation and the tax treatment of rental income are all real components of total return, and none of them appear here. This models operating performance only — whether the property sustains itself month to month.

The tax side in particular varies enough by situation, entity structure and jurisdiction that it needs a professional rather than a form field. Take your numbers to a CPA before treating any of this as a decision.