Real Estate Investment Calculator (Cap Rate, Cash-on-Cash, ROI)

Calculate real estate returns by analyzing the benefits, costs and key metrics of an income property

Would you like to know the financial impact of investing in a rental property over the course of 10 years? Are you curious about your equity growth and if you will have a positive monthly cash flow? Additionally, what happens if the economy takes a downturn? Use this financial calculator tool and see how your wealth will accumulate by Year 10. This calculator provides you with an analysis of common industry metrics: Capitalization Rate, Cash-on-Cash, and ROI.

Start your business case to see how your investment property returns will grow over time

There is information already inputted to help you get started. Go ahead can adjust this business case to you your specific needs.

Use the Real Estate guide further below to understand the terms used in the calculator. For a detailed calculator walk through, review the 12-step Guide to Calculating Real Estate Returns.

Below are my recommended links and references to help you build your business case.

Remember to keep a copy for yourself by entering your email address at the bottom of the “Business Case Summary” section.

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View over 1,000,000 Real Estate Foreclosure Investment Opportunities in the US

Make sure to use the House Flipping Property ROI Calculator to estimate your return on a foreclosure.

Guide to Calculate Your Investment Property Rate of Return (ROI, Cash-on-Cash, Cap Rate)

Calculating a real estate investment’s return on investment (ROI) is crucial to determine its feasibility. The guide below will explore the factors outlined to help you measure your rental property ROI.

1. Transaction and Start-up / Closing Costs:

  • Purchase Purchase Price: The total cost of acquiring the property.
  • % Down Payment: The percentage of the purchase price you pay upfront.
  • Down Payment: The actual amount you pay upfront.
  • Legal and Regulatory Fees: The costs associated with the legal transfer of the property, including your attorney fees, mortgage discharge, setup or transfer, utility and property tax ownership transfer, government fees and taxes, liens, title insurance, and more.
  • Renovation and Repairs: The cost of any necessary renovations or repairs to make the property rentable or increase its value.
  • Other Fees and Expenses: Any additional costs related to the purchase, such as appraisal fees or home inspection fees.
  • Land Transfer Tax: A tax the government imposes on the transfer of property ownership.
  • Annual Property Growth Rate: The expected annual property value increase.

2. Mortgage Details:

  • Mortgage Insurance: Generally, if your down payment is less than 20% of the property’s value, you may need to pay for mortgage insurance. This gets added to your mortgage amount.
  • Mortgage Amount: The total amount borrowed from a lender once you deduct your down payment and add your mortgage insurance.
  • Interest Rate: The annual interest rate on your mortgage. Conventional mortgages will have the option of a fixed or variable rate that adjusts if the government moves their rate up or down.
  • Loan Term (Years): The number of years you will amortize the mortgage. The longer the amortization period, the lower the monthly payment. However, extended amortization periods will also result in more interest paid.
  • Monthly Mortgage Payment: You’ll pay monthly to service the mortgage, including principal and interest.

3. Estimated Rental Price and Expenses:

  • Rental Estimate: The expected monthly rental income from the property.
  • Property Taxes: The property taxes you pay each year to the government. They tend to be split up over monthly payments.
  • Maintenance Costs or Fees: Any monthly or annual fees for maintenance of the property or common areas. This usually applies to condos, townhomes, or HOA properties.
  • General Repairs: An estimate of ongoing maintenance and repair costs.
  • Property Management Fees: Fess when you hire a property management company. This includes services such as finding and vetting tenants, managing issues, collecting rent, and performing minor repairs.
  • Occupancy Rate : The percentage of time the property is expected to be rented out. If your area has high tenant turnover, you may need to plan for tenant gaps. This is the inverse of the vacancy rate.
  • Fee to Find a Tenant: The costs of using a real estate agent to find a tenant, and if not, Any expenses you incur with advertising, background checks, and tenant placement.
  • Alternative Investment/Discount Rate: The rate of return you could earn from alternative investments if you didn’t invest in real estate. This helps assess the opportunity cost of your investment.

4. Monthly Utilities:

  • Water, Electricity, Heat: Specify which utilities you, as the landlord, will be responsible for paying. Some landlords include utilities in the rent, while others pass them on to the tenants. When possible, have the tenants setup direct agreements with the utility providers. This allows them to only pay for what they use, and if there are any payment issues, it doesn’t land on you (the landlord).
  • Internet: Similar to utilities, specify whether you’ll include internet in the rent or have tenants set up their accounts.
  • Content/Tenant Insurance: Determine if you’ll require tenants to have renters’ insurance and whether you’ll factor this cost into your calculations.

Make sure to consider the potential tax implications of your real estate investment, as taxes can vary based on your personal situation, location, and government rules. Your tax arrangement can significantly impact your ROI. Remember to consult with your financial advisor, accountant, or real estate help inform your decision.