Real Estate ROI Calculator
See what a rental property could actually return. Plug in your own numbers to model cash flow, mortgage paydown, appreciation, and a sale, the same inputs a real underwriting model uses.
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Schedule a CallHow to calculate ROI on a rental property
A rental property makes money in four ways: monthly cash flow, mortgage paydown as tenants or guests cover the loan, appreciation, and the profit when you sell. Most quick calculators stop at cash flow. This one combines all four into an annualized return over the time you plan to hold the property.
- Monthly cash flow is revenue minus the mortgage payment, property taxes, insurance, maintenance, vacancy and management.
- Cash-on-cash return is one year of cash flow divided by the cash you put in: your down payment plus furnishings and setup for a short-term rental.
- Annualized return is the internal rate of return (IRR) on your cash, counting every year of cash flow and the net proceeds when you sell after paying off the loan and selling costs.
Example: with the default inputs, a $650,000 short-term rental earning $8,350 a month, bought with 20% down at a 7% rate, produces about $1,241 a month of cash flow, an 8.8% cash-on-cash return and a 12.5% annualized return over a 5 year hold.
Short-term vs. long-term rental returns
Short-term rentals usually bring in more revenue than a long-term lease on the same home, but they cost more to run. Full-service management often runs 20% to 25% of revenue instead of 8% to 10%, the home has to be furnished before it can list, insurance is higher, and frequent turnover adds wear. Use the Short-Term and Long-Term toggle to run the same property both ways and see which one actually returns more after expenses.
What is a good ROI on a rental property?
There is no single right number, because return depends on the market, the financing and how much risk you take on. Many investors use cash-on-cash return as a first screen, then look at the annualized return over the full hold to account for appreciation and the sale. Compare any deal against what the same cash could earn elsewhere with similar risk, and stress test it with lower revenue and higher expenses before you buy.
Frequently asked questions
What is cash-on-cash return?
Cash-on-cash return is your annual cash flow after all expenses and the mortgage, divided by the total cash you invested. If you put $170,000 into a property and it produces $15,000 of cash flow in a year, your cash-on-cash return is about 8.8%. It measures the cash the property pays you, not appreciation or loan paydown.
What is the difference between cash-on-cash return and annualized return?
Cash-on-cash return looks at one year of cash flow. Annualized return, also called internal rate of return or IRR, looks at the whole investment: every year of cash flow plus the money you receive when you sell, adjusted for timing. A property can have a modest cash-on-cash return and a strong annualized return if it appreciates, or the reverse.
What expenses should I include when calculating rental property ROI?
At a minimum: the mortgage payment, property taxes, insurance, a maintenance reserve, a vacancy reserve and property management. Short-term rentals also carry cleaning, utilities, supplies, software and platform fees, which you can build into your revenue or reserve assumptions. Use the property's post-sale tax bill and a real insurance quote, since both are often understated in listings.
Why does the calculator include furnishings for short-term rentals?
A short-term rental cannot take bookings until it is furnished and set up, so that money is part of the cash you invest. Leaving it out makes cash-on-cash return look higher than it really is. Long-term rentals are usually leased unfurnished, so the field is hidden in that mode.
Does this calculator include taxes and depreciation?
No. Results are before income taxes. Depreciation, cost segregation and the short-term rental tax rules can meaningfully change your after-tax return. Use the STR Tax Savings Calculator to estimate that part, and confirm everything with a CPA.
How accurate is this rental property calculator?
It is as accurate as the numbers you enter. Revenue, expenses, interest rates, appreciation and sale prices will all differ in real life. Treat the results as a starting point, then rebuild the numbers from real comps, a lender quote, an insurance quote and the local tax rate before you make an offer.
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