Calculate your rental property's true return on investment — including cash-on-cash return, cap rate, NOI, GRM, break-even occupancy, and total annualized ROI including appreciation over your hold period.
Real estate investors use multiple metrics to evaluate a property's performance. Cash-on-cash return tells you how hard your invested cash is working. Cap rate lets you compare properties independent of financing. NOI shows you the property's operating profitability. This calculator computes all of them in one place so you can make a fully informed investment decision.
Cash-on-cash (CoC) return measures the annual pre-tax cash flow divided by your total cash invested (down payment + closing costs). It tells you how efficiently your invested cash is working. A CoC return of 6–8% is considered good for most markets; above 10% is excellent. In expensive markets (LA, NYC), many investors accept 3–5% CoC because they're betting heavily on appreciation.
The capitalization rate is NOI divided by the purchase price. It's used to compare properties independent of financing — so it's the same whether you paid all cash or borrowed 80%. A cap rate of 4–5% is common in expensive coastal markets; 7–9% is common in Midwest and Sun Belt markets. Higher cap rates typically mean more income relative to price — but also potentially more risk (worse location, older property).
NOI is effective gross income minus all operating expenses, NOT including mortgage payments. It represents the property's inherent profitability before financing. NOI is what you use to calculate cap rate and to compare the property's income potential against similar properties.
GRM = Purchase Price ÷ Annual Gross Rent. It's a quick screening tool — lower is better. A GRM of 10 means the price is 10x annual rent. Most investors want a GRM below 12 for residential properties; below 10 indicates strong income relative to price. GRM doesn't account for expenses, so always follow up with full NOI analysis.
Break-even occupancy is the minimum occupancy rate needed to cover all operating expenses and mortgage payments. If break-even is 75%, you only need 75% occupancy to avoid losing money. Anything above that is profit. Most investors want break-even below 85% to have a comfortable safety margin against vacancy.
A good ROI depends on your market and strategy. Most investors target 8–12% total annual ROI (combining cash flow, appreciation, and principal paydown). Cash-on-cash return of 6–10% is considered solid. In high-appreciation markets, investors sometimes accept lower cash flow (1–3% CoC) expecting appreciation to drive overall returns.
The 1% rule says monthly rent should be at least 1% of the purchase price ($2,800/month rent on a $280,000 property). It's a quick filter to estimate whether a property will cash flow. In most 2024–2025 markets, finding properties that meet the 1% rule is difficult due to high prices and interest rates.
Cash-on-cash = Annual pre-tax cash flow ÷ Total cash invested × 100. Example: If you put $70,000 down and the property generates $5,600/year in cash flow (after mortgage), that's 5,600 / 70,000 = 8% CoC return.
It depends entirely on the specific property, location, and price. With mortgage rates elevated compared to 2020–2021, many properties that once cash-flowed strongly no longer do. However, properties purchased below market value, multi-unit properties, or those in strong rent-growth markets can still produce solid returns. The fundamentals — supply/demand for housing, population growth, job market — matter more than general market conditions.
Operating expenses include property taxes, insurance, property management, repairs and maintenance, capital expenditure reserves (roof, HVAC, water heater), HOA fees, utilities you pay, lawn care, and vacancy losses. Many new landlords underestimate expenses — the 50% rule of thumb says expenses (excluding mortgage) should be budgeted at approximately 50% of gross rent.