Rental Property ROI Calculator for Cap Rate, NOI and Rental Yield

Estimate rental property returns before financing using purchase price, cash down payment, annual gross rent, operating expenses and optional appreciation. Results include gross rental yield, net operating income, cap rate, a simplified pre-financing return and an appreciation-inclusive screening estimate.

Rental Property Return, NOI and Cap Rate Calculator

Use one currency for all monetary inputs. $ labels do not convert currencies.

Use annual income and operating costs from the same 12-month period.

Gross Rental Yield-

Net Operating Income (NOI)-

Capitalization Rate (Cap Rate)-

Simplified NOI-to-Down-Payment Return-

Screening metric only: annual NOI divided by the entered down payment. It is not full cash-on-cash return because debt service, closing costs, loan fees and renovation cash are excluded.

Projected Annual Appreciation-

Estimated NOI + Appreciation Return-

Screening estimate: annual NOI plus projected appreciation divided by the entered down payment. It excludes financing, acquisition, tax and sale costs, and appreciation is not guaranteed.

Example: Duplex Rental Property

Purchase price: $350,000

Cash down payment: $70,000

Annual gross rental income: $32,400

Annual operating expenses: $9,000

Net operating income: $23,400

Gross rental yield: 9.26%

Cap rate: 6.69%

Simplified NOI-to-down-payment return:33.43%

Projected appreciation at 4%: $14,000

Estimated NOI + appreciation return: 53.43%

This screening example excludes mortgage principal and interest, closing costs, renovation cash, capital reserves, income tax and selling expenses. Run a second scenario with 0% appreciation.

Rental Property ROI, NOI, Cap Rate and Yield Formulas

Gross Rental Yield = (Annual Gross Rental Income / Purchase Price) x 100NOI = Annual Gross Rental Income - Annual Operating ExpensesCap Rate = (NOI / Purchase Price) x 100Simplified NOI-to-Down-Payment Return = (NOI / Down Payment) x 100Annual Appreciation = Purchase Price x Appreciation RateEstimated NOI + Appreciation Return = ((NOI + Annual Appreciation) / Down Payment) x 100

Gross rental yield is a quick rent-to-price screen before operating expenses.

NOI is property income after recurring operating expenses but before financing, income tax, depreciation and major capital improvements.

Cap rate compares NOI with the property price, making it useful for unlevered comparisons between similar properties.

The NOI-to-down-payment result is not full cash-on-cash return because the model does not subtract mortgage debt service or include all acquisition cash.

The appreciation-inclusive result is a scenario, not a guaranteed or realized return. Test 0%, expected and downside appreciation assumptions.

What Belongs in Rental Property Operating Expenses?

Use recurring property-level costs from the same annual period as rent. Separate ordinary operations from financing, tax and capital-improvement items.

Property taxes and insurance: Use current bills or written quotes and consider reassessment after purchase.Vacancy and credit loss: Deduct expected empty periods and uncollectible rent once, either in income or expenses.Management and leasing: Include management fees, tenant placement, renewals and recurring professional costs.Maintenance and routine repairs: Include cleaning, landscaping, pest control, servicing and ordinary repairs required to keep the property rentable.HOA and owner-paid utilities: Add association dues, common-area expenses and utilities paid by the owner.Capital expenditure reserve: Consider a separate reserve for roofs, HVAC, major appliances and structural work. Large improvements are not ordinary NOI expenses but still affect investment return.

Exclude mortgage principal and interest from NOI. Tax rules for interest, depreciation and capital improvements vary by jurisdiction and differ from this screening model.

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Investment & Operations

Rental property ROI, cap rate, NOI and rental yield guide

Learn how gross rental yield, operating expenses, NOI, cap rate, cash invested, financing and appreciation fit into a complete rental property analysis.

Read the complete guide Browse all guides

Rental Property ROI Calculator FAQs

It estimates gross rental yield, NOI, cap rate, a simplified NOI-to-down-payment return and an optional appreciation-inclusive return. It is designed for initial property screening before financing and transaction costs.

NOI equals annual gross rental income minus recurring property operating expenses. The calculator excludes mortgage principal, mortgage interest, income tax, depreciation and major capital improvements from NOI.

No. Full cash-on-cash return normally uses annual cash flow after debt service divided by total cash invested, including items such as closing costs and renovation cash. This calculator divides NOI by down payment, so the result is a simplified pre-financing screen.

Gross rental yield divides annual gross rent by purchase price and ignores operating expenses. Cap rate divides NOI by purchase price, so it reflects recurring property operating costs but still excludes financing.

Include property taxes, insurance, management, routine repairs, maintenance, owner-paid utilities, HOA fees, leasing costs and a vacancy or credit-loss allowance. Keep mortgage payments, income tax and major improvements separate.

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Rental Property Calculator Disclaimer: This calculator provides simplified screening estimates for educational and preliminary analysis only. Results depend on the figures entered and exclude mortgage debt service, closing costs, loan fees, renovation cash, capital expenditure reserves, income tax, depreciation, selling costs and other material items. Appreciation is an assumption, not a guaranteed or realized return. Expense and tax treatment varies by property and jurisdiction. Verify rent, expenses, property condition, financing and legal requirements with qualified local professionals before purchasing or financing real estate.