Investment Property Calculator

This investment property calculator helps you analyze potential real estate investments. Calculate cash flow, return on investment (ROI), cap rate, and other key metrics to make informed investment decisions.

Property Information

Financing

Each point costs 1% of the loan amount and reduces the interest rate

Income

Laundry, parking, storage, etc.

Expenses

Percentage of property value per year
Percentage of rental income
Only include utilities you pay for

Analysis Period

Realtor commissions, closing costs, etc.

How the Investment Property Calculator Works

This calculator uses standard real estate investment formulas to analyze potential property investments:

Cash Flow Calculation

Cash flow is the difference between income and expenses:

Monthly Cash Flow = Monthly Income - Monthly Expenses

Where:

  • Monthly Income = Rental Income + Other Income - (Vacancy Rate × Rental Income)
  • Monthly Expenses = Mortgage Payment + Property Tax + Insurance + Maintenance + Property Management + HOA + Utilities + Other Expenses

Return Metrics

Several metrics are used to evaluate investment performance:

Cash on Cash Return

Cash on Cash Return = (Annual Cash Flow ÷ Total Cash Invested) × 100%

Capitalization Rate (Cap Rate)

Cap Rate = (Net Operating Income ÷ Property Value) × 100%

Where Net Operating Income (NOI) = Annual Income - Annual Expenses (excluding mortgage)

Return on Investment (ROI)

Total ROI = ((Net Profit + Equity Gained) ÷ Total Investment) × 100%

Where:

  • Net Profit = Sum of Cash Flows + Net Sale Proceeds - Total Investment
  • Equity Gained = Final Property Value - Initial Property Value - Remaining Loan Balance

Debt Service Coverage Ratio (DSCR)

DSCR = Net Operating Income ÷ Annual Debt Service

Where Annual Debt Service = 12 × Monthly Mortgage Payment

Key Investment Property Considerations

  • Cash Flow: Positive cash flow is essential for sustainable investment
  • Cap Rate: Higher cap rates indicate better income relative to property value
  • Cash on Cash Return: Measures annual return relative to actual cash invested
  • DSCR: Values above 1.25 are typically preferred by lenders
  • Appreciation: Property value growth can significantly impact long-term returns
  • Vacancy Rate: Be realistic about potential periods without rental income
  • Maintenance: Budget 1-2% of property value annually for maintenance
  • Capital Expenditures: Plan for major replacements (roof, HVAC, etc.)