Rental Property ROI Calculator

Use one consistent currency for every monetary input. Dollar symbols are display labels and do not convert exchange rates.

Enter your property investment details to calculate rental yield, NOI, cap rate, Simplified Pre-Financing Return, and estimated total pre-financing ROI.

Example: Duplex Rental Property

Purchase price: $350,000

Down payment: $70,000

Monthly rent: $2,700

Annual gross rent: $32,400

Annual operating expenses: $9,000

Net operating income: $23,400

Gross rental yield: 9.3%

Cap rate: 6.7%

Simplified Pre-Financing Return: 33.4%

Appreciation at 4%: $14,000

Estimated total pre-financing ROI: 53.4%

This example excludes mortgage payments, closing costs, renovation costs, income taxes, and selling expenses.

Real Estate ROI Formulas

Gross Rental Yield = (Annual Rent / Purchase Price) x 100 NOI = Annual Rental Income - Annual Operating Expenses Cap Rate = (NOI / Purchase Price) x 100 Simplified Pre-Financing Return = (NOI / Down Payment) x 100 Estimated Total Pre-Financing ROI = ((NOI + Annual Appreciation) / Down Payment) x 100

Gross rental yield compares annual rent with the property's purchase price before operating expenses are deducted.

Net operating income (NOI) is the rental income remaining after recurring property operating expenses. Mortgage payments, income taxes, depreciation, and major improvements are excluded.

Cap rate measures the property's operating return relative to its purchase price, allowing properties with different financing arrangements to be compared more consistently.

Simplified Pre-Financing Return compares NOI with the entered down payment. Because loan payments and other upfront costs are not deducted, the result may be higher than the investor's actual cash return.

Estimated total pre-financing ROI combines NOI with projected annual appreciation and compares that amount with the down payment. It excludes financing, acquisition, tax, and sale costs. Appreciation is an estimate and normally becomes a realized gain only when the property is sold.

What to Include in Operating Expenses

Include recurring annual costs required to operate and maintain the rental property. Use expenses from the same 12-month period as your rental income.

Property taxes and insurance: Include annual property taxes, landlord insurance, liability coverage, and any additional property-specific insurance premiums. Property management and leasing fees: Add management charges, tenant placement fees, lease renewal costs, and other recurring professional management expenses. Maintenance and routine repairs: Include regular servicing, minor repairs, landscaping, cleaning, pest control, and other costs needed to keep the property rentable. Vacancy and unpaid-rent allowance: Estimate the income lost during vacant periods, tenant turnover, payment delays, or uncollectible rent. HOA fees and owner-paid utilities: Add association dues and any electricity, water, gas, internet, waste, or common-area costs paid by the property owner. Other recurring property expenses: Include licenses, inspections, accounting, legal support, security, advertising, and other annual operating costs not listed above.

Exclude mortgage principal, mortgage interest, depreciation, income taxes, closing costs, and major property improvements from NOI and cap rate. Use actual property records whenever available instead of relying only on general estimates.

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Investment & Operations

Rental property NOI, cap rate and return guide

Understand how purchase price, cash invested, rent, operating expenses and appreciation affect NOI, cap rate and simplified pre-financing return.

Read the complete guide Browse all guides

Frequently Asked Questions

NOI equals annual rental income minus annual operating expenses. It normally excludes mortgage principal, interest, income tax and depreciation so properties can be compared before financing choices.

Cap rate divides NOI by purchase price. It is an unlevered property-income yield and does not include appreciation or financing.

It divides NOI by the entered cash invested. Because the current form does not include mortgage debt service or closing-cost detail, treat it as a simplified pre-financing comparison rather than a full cash-on-cash return.

The entered appreciation percentage is applied to purchase price and added to NOI before comparing the total with cash invested. Appreciation is uncertain, so also test a zero-appreciation scenario.

Include recurring operating costs such as property tax, insurance, repairs, management, utilities paid by the owner and vacancy allowance. Keep mortgage payments separate because they are not part of NOI.

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Real Estate Investment Disclaimer: This calculator provides simplified estimates for educational and preliminary property analysis only. Results depend on the figures you enter and may not include mortgage payments, closing costs, taxes, renovation expenses, vacancies, selling costs, or unexpected repairs. Property values, rental income, and appreciation are not guaranteed. Do not treat the results as financial, legal, tax, appraisal, or investment advice. Verify all figures and consult qualified professionals before making a property investment decision.

Rental Property ROI Calculator with NOI, Cap Rate and Appreciation