Investment Property Calculator

ROI = (Annual Net Income / Total Investment) x 100. Annual net income is your rental income minus all operating expenses (taxes, insurance, maintenance, vacancy, management). Total investment includes your down payment, closing costs, and any renovation costs. Our calculator computes this automatically along with cap rate and cash-on-cash return.

A good cap rate depends on the market and property type. Generally, 5-10% is considered solid. Higher cap rates (8-10%) typically indicate higher risk or less desirable locations, while lower cap rates (4-6%) suggest premium locations with lower risk. Cap rates help compare properties independent of financing.

Cash flow = Monthly Rental Income - All Monthly Expenses (mortgage payment, property tax, insurance, maintenance, vacancy allowance, management fees). Positive cash flow means the property generates income each month. Aim for at least $100-200 per door monthly after all expenses.

The 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price. For a $200,000 property, look for $2,000/month rent. This isn't a guarantee of profitability but helps filter out poor deals quickly. Properties meeting the 1% rule are more likely to generate positive cash flow.

Include all operating expenses: mortgage payment (P&I), property taxes, homeowners insurance, maintenance (1-2% of property value), vacancy allowance (5-8%), property management (8-10% if applicable), HOA fees, utilities (if landlord-paid), and capital expenditure reserves. Don't forget to account for turnover costs between tenants.

Investment properties typically require 20-25% down payment plus closing costs (2-5%). On a $300,000 property, expect to need $60,000-$75,000 for down payment plus $6,000-$15,000 for closing costs. You should also have 6 months of reserves for mortgage payments and maintenance. Some FHA loans allow 3.5% down for house hacking.