Investing · real estate

Real Estate Investment Calculator

Measure the total return on a rental property — cash flow, mortgage paydown, and appreciation combined into total ROI, annualized return, and cash-on-cash.

Transparent assumptions Total & annualized ROI Return composition Works on any device
Calculate my return See the formula

Formula shown · assumptions stated.

A rental property pays you three ways, not one. Cash flow is the smallest piece for most leveraged deals — principal paydown and appreciation usually do more of the work. This calculator combines all three into a total and annualized ROI on the cash you actually invested.

Enter Your Numbers

Purchase & financing
$

Property price in your local currency.

%

Deposit as a percent of the price.

%

Annual rate on the loan.

yr

Length of the mortgage.

Upfront costs
$

Legal, lender, and transaction fees.

$

One-off works before or at purchase.

Rental income & expenses
$

Gross rent collected per year.

$

Tax, insurance, maintenance, management.

Appreciation & exit
%

Expected yearly change in property value.

%

Agent and sale costs at exit.

yr

How long you plan to own it.

Your result

Total ROI

65.66%

Total profit over the period as a percent of cash invested.

Annualized ROI

10.62%

Cash-on-Cash Return

3.73%

Total Profit

$49,243

Net Sale Proceeds

$110,261

Where your return comes from

Cash flow$13,982
Principal paydown$15,334
Appreciation (net)$34,928

Equity build-up by year

Property value, loan balance, equity, and cumulative cash flow over the holding period.

YearProperty valueLoan balanceEquityCumulative cash flow
Year 1$310,500$237,317$73,183$2,796
Year 2$321,367$234,455$86,912$5,593
Year 3$332,615$231,401$101,214$8,389
Year 4$344,257$228,143$116,114$11,186
Year 5$356,306$224,666$131,640$13,982

How to read your result

Lead with annualized ROI — it compares this property against other investments (index funds, bonds) on equal terms, unlike total ROI which mixes different holding periods together.

Then look at the return composition: cash flow, principal paydown, and appreciation. A return leaning almost entirely on appreciation is more speculative than one with solid cash flow, even at the same headline ROI — stress-test by lowering the appreciation rate to see how durable the return really is.

How the formula works

Net sale proceeds

Proceeds = Future Value − Selling Cost − Remaining Loan

Value grown at your appreciation rate, minus exit costs and the loan payoff.

Total profit

Profit = Net Sale Proceeds + Cumulative Cash Flow − Cash Invested

Everything you get back, minus everything you put in.

Total ROI

Total ROI = Total Profit ÷ Cash Invested

Whole-period return on the cash you actually committed.

Annualized ROI

Annualized = (Equity Multiple)^(1/Years) − 1

True compound annual rate — the fair way to compare hold periods.

Worked example

A $300,000 property is bought with 20% down at 6.5% over 30 years, plus $9,000 closing and $6,000 renovation. It rents for $30,000 a year with $9,000 of operating expenses, appreciates 3.5% a year, and is sold after 5 years with 6% selling costs.

Cash invested: 60,000 + 9,000 + 6,000 = $75,000. Annual cash flow: 30,000 − 9,000 − 18,204 mortgage = $2,796. Value after 5 years: 300,000 × 1.035⁵ = $356,306. Loan paid down: 240,000 − 224,666 = $15,334. Net sale proceeds: 356,306 − 21,378 − 224,666 = $110,261.

Total profit: 110,261 + 13,982 − 75,000 = $49,243 — a 65.66% total return, or 10.62% compounded annually. Only $13,982 is rental cash flow; $15,334 is loan paydown and roughly $34,928 is appreciation net of selling costs — the headline cash-on-cash (3.73%) badly understates the deal.

Assumptions

  • The mortgage is a standard fully-amortizing fixed-rate loan held for the whole period.
  • Rent, expenses, and the appreciation rate are steady; real markets are cyclical and can fall as well as rise.
  • Total profit is before income tax and any depreciation recapture, which vary by jurisdiction.
  • Cash flow is held at the year-one figure for clarity; rising rents would increase the return.

Limitations

  • Appreciation is the largest and least certain component; a small change in the rate moves the result a lot.
  • Annualized ROI is sensitive to the holding period and to selling costs at exit.
  • The model excludes taxes, refinancing, and major unplanned capital costs.
  • This is an educational estimate, not investment, tax, or lending advice.

Frequently asked questions

What is a good ROI on a rental property?

It depends on your market, leverage, and risk tolerance, so compare the annualized ROI against alternatives like index funds rather than a fixed target. Many investors want a compound annual return that clearly beats a low-cost stock index to justify the extra work and risk of direct property.

What is the 2% rule for rental properties?

A quick screening heuristic: if monthly rent is at least 2% of the purchase price (e.g. $2,000 rent on a $100,000 property), the deal likely cash-flows well before running the numbers. It is a rough filter for cheaper markets, not a substitute for this calculator — high-priced markets rarely hit 2% yet can still be excellent investments once appreciation and leverage are counted.

What is the difference between total ROI and annualized ROI?

Total ROI is the whole profit over the holding period as a percent of cash invested. Annualized ROI converts that to a yearly compound rate, which is the fair way to compare investments of different lengths. Dividing total ROI by the number of years overstates the annual figure and should be avoided.

Why include principal paydown in the return?

Each mortgage payment repays part of the loan, converting debt into equity you own. Over years this builds real wealth even if cash flow is modest, so a return that ignores paydown understates how much the property earns. This calculator counts it explicitly.

How much does appreciation affect the result?

A lot, because it applies to the whole property value while you only invested the down payment, so leverage magnifies it. That also makes it the riskiest input: lower the appreciation rate and watch how quickly the return falls, since prices can decline as well as rise.

Does this include taxes?

No. Total profit here is before income tax, capital-gains tax, and any depreciation recapture, all of which vary by country and personal situation. Treat the result as a pre-tax comparison and consult a tax professional for your after-tax return.

What is cash-on-cash versus ROI here?

Cash-on-cash is just the first-year cash flow divided by cash invested, ignoring paydown and appreciation. Total and annualized ROI capture everything over the hold. A deal can have low cash-on-cash but strong total ROI if paydown and appreciation are doing the work.

Can I use this for any currency?

Yes. Keep every input in one currency and the percentages and amounts are valid anywhere. Replace the default appreciation, cost, and expense assumptions with figures for your local market for the most reliable result.

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Investment disclaimer

This investment calculator is for educational and general reference use only. Real estate taxes, mortgage rules, transaction costs, appreciation, and investment outcomes vary by country, region, lender, property type, buyer status, and date. Verify important decisions with qualified professionals and official sources.

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Authorship & verification

Written and maintained by

  • Formula and examples verified on 16 August 2026
  • Educational estimate only

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