Rental Property ROI Calculator

Cash-on-cash return measures the annual pre-tax cash flow a rental property produces divided by the actual cash you invested, such as your deposit and closing costs. It answers a practical question: what return am I earning on the money I actually put in this year. Because it focuses on real cash rather than paper value, it is one of the most useful yardsticks for comparing rental investments and financing choices.

The capitalisation rate is a property's annual net operating income divided by its price or value, expressed as a percentage. It gives a quick sense of the return a property produces independent of how it is financed, which makes it handy for comparing properties or gauging whether a price is reasonable for a given income. Lower cap rates usually signal pricier markets or lower-risk properties, and higher cap rates the reverse.

Appreciation - the property rising in value - is uncertain and outside your control, while cash flow is the rent left over after all expenses each month and is what keeps the investment sustainable. A property that loses money every month relies entirely on hoped-for appreciation and can force a sale at a bad time. Prioritising positive cash flow gives you staying power; appreciation is then a bonus rather than the whole thesis.

No. Real estate carries costs and risks this estimate cannot fully model: vacancies, major repairs, problem tenants, rising rates on variable loans, illiquidity, and local market shifts. Build conservative assumptions for vacancy and maintenance, and treat the output as a screening tool. Consult professionals on the specific property, financing, and local rules before investing.