Real Estate ROI Calculator
Calculate ROI on rental properties and house flips. Factor in purchase price, rehab costs, rental income, and expenses to see your true return.
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About This Calculator
Real estate ROI depends on your investment strategy. Rental properties generate ongoing cash flow measured by cap rate and cash-on-cash return. Flips generate one-time profit measured as a percentage of total invested capital. Both strategies require accurate expense modeling — most failed investments come from underestimating rehab costs, holding costs, or ongoing expenses. This calculator models both scenarios with your actual numbers.
Industry Insights
- Cap rate (net operating income / purchase price) is the standard metric for comparing investment properties, but it ignores financing. Cash-on-cash return (annual cash flow / total cash invested) better reflects your actual return when using leverage.
- The 1% rule (monthly rent should be at least 1% of purchase price) is a quick screening tool, not a final analysis. In expensive markets, 0.7-0.8% properties can still cash flow positively with good financing terms and low vacancy rates.
- Appreciation is speculative - never buy a rental property that requires appreciation to be a good investment. Positive cash flow from day one is the only reliable metric. Everything else (equity buildup, tax benefits, appreciation) is a bonus.
Related Calculators
For authoritative guidance, see National Association of Realtors — Market Data.
Frequently Asked Questions
What is a good ROI for a rental property?
Most real estate investors target a cash-on-cash return of 8-12% for rental properties. Cap rates of 5-8% are typical in most markets. Returns vary significantly by market — high-appreciation cities like Austin or Denver often have lower cap rates (3-5%) while Midwest markets may offer 8-12%.
How do you calculate ROI on a house flip?
Flip ROI = (Sale Price - Purchase Price - Rehab Cost - Holding Costs - Selling Costs) / Total Investment × 100. A good flip return is 15-20%+ on total invested capital. Factor in carrying costs (mortgage, taxes, insurance) for each month you hold the property.
What expenses should I include in rental ROI?
Include property taxes, insurance, property management (8-12% of rent), maintenance and repairs (1-2% of property value/year), vacancy allowance (5-8%), and any HOA fees. Many new landlords underestimate expenses — budget for at least 40-50% of gross rent going to expenses.
What is the 1% rule in real estate?
The 1% rule states that monthly rent should equal at least 1% of the purchase price for a rental to cash flow positively. A $200,000 property should rent for at least $2,000/month. This is a quick screening tool — always run full numbers before investing.
The calculators on The Simple Toolbox are for educational and planning purposes only. Results are estimates based on your inputs and standard assumptions — they are not financial, legal, or tax advice. Consult a qualified professional before making significant financial decisions.
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