Rental property ROI calculator
Model the complete first-year return on a rental property. See spendable cash flow separately from principal paydown and appreciation, so a strong headline ROI cannot hide weak day-to-day economics.
Mortgage payments include principal and interest. Enter principal repaid separately so the equity portion can be added back only in total ROI.
(€3,520 cash flow + €3,500 principal + €5,000 appreciation) ÷ €67,500 cash invested
Cash invested equals down payment + closing costs + upfront renovation. Purchase price financed by debt is not counted twice.
Estimates only, not investment, tax, or financial advice. Use one currency throughout. Appreciation is uncertain; test zero and negative scenarios before deciding.
How to use it
- 1Enter acquisition cash: down payment, closing costs, and upfront renovation.
- 2Add rent, vacancy, operating costs, mortgage payments, and principal repaid.
- 3Compare cash-on-cash return with total ROI, then rerun with zero appreciation.
How to use the result
Separate cash from equity
Cash-on-cash return uses annual cash flow after the full mortgage payment. Total ROI adds the principal repaid and estimated appreciation because both increase equity, but neither is automatically spendable cash in your account.
Stress-test appreciation
A deal should not depend on optimistic price growth to cover weak rental economics. Run the model with zero appreciation, higher vacancy, more operating costs, and a repair reserve to see whether the cash flow still supports the risk.
Guides and workflows for the result
Use the calculation as a starting point, then examine the assumptions and carry the result into the matching PropFlow workflow.
Questions
- What is the difference between cash-on-cash return and ROI?
- Cash-on-cash return divides spendable annual cash flow by the cash invested. Total ROI also includes mortgage principal repaid and estimated appreciation, which build equity but may not be available to spend.
- Why is the full mortgage payment subtracted from cash flow?
- Both principal and interest leave your bank account, so the full payment affects cash flow. Principal is then added back as equity only when calculating total return, preventing it from being ignored or counted twice.
- Should I include appreciation?
- Only as a clearly labelled assumption. Appreciation is uncertain and market-specific. Test zero growth and a negative scenario alongside your base case, and avoid relying on appreciation to rescue persistently negative cash flow.