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Calculate cap rate, cash-on-cash return, NOI, and monthly cash flow
Rental property ROI measures the annual return on your investment in rental real estate. Key metrics include cap rate (NOI ÷ purchase price), cash-on-cash return (annual cash flow ÷ cash invested), and Net Operating Income (NOI = gross income − operating expenses).
Monthly Operating Expenses
Monthly Cash Flow
-$156.73
Cap Rate
5.76%
Cash-on-Cash
-2.85%
Annual NOI
$17,280.00
Cash Invested
$66,000.00
Mortgage Payment
$1,596.73/mo
| Metric | Good | Great |
|---|---|---|
| Cap Rate | 5 to 7% | 8 to 10%+ |
| Cash-on-Cash | 8 to 10% | 12%+ |
| Vacancy Rate | 5 to 7% | <5% |
| 1% Rule | Monthly rent ≥ 1% of purchase price | |
Formula
Cap Rate = NOI ÷ Purchase Price × 100NOI = Net Operating Income = Gross Income − Vacancy − Operating Expenses
Cash-on-Cash = Annual Cash Flow ÷ Total Cash Invested × 100
Cash Flow = NOI − Annual Mortgage Payments
Worked Example
$300K property, $2,200/mo rent, 20% down
Did you know? The 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price for a property to be worth analyzing further. For a $300K property, that means $3,000/mo in rent (source: BiggerPockets).
Sources
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