Rental Property ROI Calculator
Project buy-and-hold wealth: operating cash after debt service, principal paydown, appreciation through your exit, and sale frictions, with a five-point appreciation stress grid.
100% client-side. Inputs stay in your browser (ons-rental-roi-inputs).
Stress a buy-and-hold: rent and expense growth, fixed-rate amortization, sale costs, and appreciation, then read total versus annualized ROI.
Total ROI
227.6%
Sale proceeds + cumulative cash flow − cash invested (full hold).
Annualized ROI
12.60%
Compounds total ROI across 10 year hold.
Cash invested
$55,000
Total cash flow
$36,006
Equity at sale (net)
$144,195
After sale costs & loan payoff
Net profit (wealth change)
$125,201
Matches ROI numerator
Cash flow vs paydown by year
Stacked annual operating cash after debt service and principal reduction booked that year.
Wealth mix (shares of gain)
Approximate split of positive cash flow, principal paydown, and appreciation on the purchase price, normalized to 100%.
Not enough positive components to chart a mix.
Appreciation sensitivity
Same operations and hold; only the appreciation slider moves. Bold row matches your current appreciation input when it hits a scenario column.
| Appreciation | Total ROI |
|---|---|
| 0% | 80.7% |
| 2% | 174.3% |
| 3% | 227.6% |
| 5% | 349.4% |
| 7% | 493.9% |
Exit value before sale costs: $335,979 · Loan balance at sale: $171,626 · Cumulative principal paid: $28,374 · Appreciation on purchase: $85,979
How this tool works
The calculator runs a year-by-year loop from year 1 through your chosen holding period. Each year, it grows your rent by the annual rent growth rate and your expenses by the expense growth rate. It computes that year's NOI (effective gross income minus operating expenses), subtracts your fixed annual mortgage payment, and records the cash flow. Behind the scenes, the mortgage amortization tracks how much principal you pay down each year. In early years, most of your mortgage payment goes to interest. As the loan ages, a larger share goes to principal, building your equity faster. At the end of the holding period, the tool calculates your sale proceeds: the appreciated property value minus sale closing costs minus your remaining loan balance. Your total profit is the sum of all years of cash flow plus the net sale proceeds minus your original cash invested. The appreciation sensitivity table runs the full calculation at five different appreciation rates so you can see how dependent your return is on property value growth. Some deals profit even at 0% appreciation because cash flow and equity paydown carry the return. Others rely heavily on appreciation to break even.
Worked example
A $250,000 purchase with 20% down ($50,000), a 7% 30-year loan, $5,000 in closing costs, $24,000 annual gross rent, 5% vacancy, $6,000 in operating expenses, 3% rent growth, 2% expense growth, 3% appreciation, and a 10-year hold with 6% sale closing costs. Total cash invested is $55,000. Year 1 cash flow is $828; by year 5 it grows to $3,196 and by year 10 to $6,599, for a total of approximately $32,500 over the decade. The property appreciates to $335,979 and after paying off the remaining $172,500 loan balance and sale costs, net sale proceeds are $143,320. Total profit is $120,820, a 219.7% total ROI and 12.3% annualized ROI. The sensitivity table shows that at 0% appreciation total ROI drops to about 80% annualized at 6%, while at 5% appreciation it climbs to about 350% annualized at 16%.
Frequently asked questions
What is included in rental property ROI?
Total ROI combines three sources: annual net cash flow from rent after all expenses and mortgage, mortgage principal paydown that builds your equity each year, and property appreciation realized when you sell. All three matter. Looking at only one gives an incomplete picture. Compare this figure across multiple properties in the same market and asset class before drawing conclusions about relative value.
What annual appreciation rate should I use?
The national average for US residential real estate is around 3-4% per year historically (based on the S&P/Case-Shiller Home Price Index). Individual markets vary widely. Use 2-3% for conservative planning. The sensitivity table lets you compare multiple scenarios without guessing.
Why is cash flow negative in early years?
High leverage (low down payment) means large mortgage payments relative to rental income. As rents grow each year while your fixed-rate mortgage stays the same, cash flow improves. Many investors accept negative early cash flow in exchange for long-term appreciation and equity buildup.
How does rent growth affect total ROI?
Rent growth compounds just like appreciation. A 3% annual increase turns $24,000 per year in rent into $31,310 by year 10. That growing income lifts your annual cash flow each year and makes the deal stronger the longer you hold. Run this calculation for a range of purchase prices and rent assumptions to understand the sensitivity of your returns.
What if I plan to refinance during the holding period?
This calculator uses a single fixed mortgage for the full holding period. If you plan to refinance, run the calculator twice: once with your current loan terms for the years before refinancing, and once with expected new terms for the remaining years. A future update may add a refinance event.
Does this account for taxes on the sale?
No. Capital gains tax on the sale depends on your income, filing status, how long you held the property, and whether you did a 1031 exchange. This calculator shows pre-tax returns. Consult IRS Publication 523 or a tax professional for your after-tax number.