Rental Property Calculator

How do you calculate the ROI on a rental property?

If you’re a new landlord or already a seasoned investor, calculating your return on a potential real estate investment is a necessity. 

The rental property calculator below makes it easy for you to quickly decide if a particular investment will be the right choice for you.

Need more details on how it works and what each input means? Check out our How It Works section. 

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Rental Property Calculator

Investing 101: Residential Rental Properties

For those unfamiliar or new to rental property investments, a residential rental property is a home that is purchased by a property investor and then leased out to tenants who pay rent. 

Types of rental properties include single-family homes or multi-family apartment buildings, condominiums, townhouses, duplexes, and more. Depending on the location of the property and the investor’s goals, they may opt for either a long-term or a short-term rental.

Investing in rental properties can be a very attractive and lucrative form of income and is considered one of the safest investments one can make. This is because there is long-term appreciation, a monthly cash-flow, and tax advantages that come with rental property investments. 

Most people have experienced renting or signing a lease in their lifetime which means they are familiar with the process of how it works. Learning to become a landlord is then interesting and less intimidating. 

Many independent landlords utilize online property management software like TurboTenant to streamline their entire rental process – from finding great tenants to collecting on-time rent payments.

How the Rental Property Calculator Works

Our rental property calculator is a useful tool to help you determine if a property is the right investment for you. Knowing the correct estimates for your rate of return as well as seeing all of your expenses laid out will help you make decisions fast when considering certain properties to buy and rent out. 

To use the calculator, plug in the correct values and percentage increases and then we’ll calculate the cap rate, cash-on-cash return, gross rent multiplier, net operating income, cash flow, and more.

Keep in mind, there is not a right or wrong answer when it comes to the calculator results. Everyone takes a different level of risk when investing, but these numbers should hopefully guide you in the right direction.

What do the inputs and outputs mean?

Rental property investing might seem complex, but once you understand the common terms when calculating your rate of return on a specific property you’ll be an expert in determining if you should invest in it or not. 

Here are important definitions for the inputs and outputs in the rental property calculator:


Property Details

The property details section includes the property value/purchase price, property repair costs, square footage, and the number of bedrooms. The purchase price is usually the asking price of the seller which can obviously be negotiated once you decide to purchase the property. 

Repair costs are the estimated total of repairs that will need to be made or possible renovations you are doing. Square footage and the number of bedrooms are important because knowing how big the property is and how many bedrooms it has will determine its value and also impact your future rent price.

Mortgage Details

The mortgage details include the loan term (years), the down payment cost, closing costs, and the interest rate. This will be different for every property – if you are purchasing a property in cash this won’t be necessary. 

Remember, down payments are typically 10-25% of the purchase price, and closing costs are usually 2-5% of the purchase price.

Rental Income Details

The rental income details include the monthly rent income, other monthly income, and the anticipated vacancy rate percentage. The monthly rent is the total anticipated monthly rent when it is fully rented – if you are curious on how to price your rental, read this blog or use TurboTenant’s trusted Rent Estimate calculator.

Other monthly income might include parking fees, coin-op laundry, or pet rent. If you are unsure about the vacancy rate, the national average is around 7% – both rent and other income will be adjusted by this rate.

Monthly Rental Expenses

Monthly rental expenses are the costs it will take to run your rental property. As the calculator inputs show, these are things such as maintenance, repairs, utilities, monthly HOA fees, and property management fees. 

If you have an older property, your operating expenses might be more as there will be more maintenance and wear and tear.

Annual Rental Expenses

The annual rental expenses include the property taxes and annual insurance fee – remember these are the total costs for the year, not monthly.

Property Operating Financial Outputs

Monthly Gross Potential Income 

The monthly gross potential income is the total possible income when a property is 100% full. This number reflects the total income a property could produce, but not what it will necessarily be.

Monthly Vacancy Loss

The monthly vacancy loss is what you could expect to lose in income due to vacancies – this is determined by the anticipated vacancy rate percentage you in put above. Remember that 7% is the national average.

Monthly Effective Gross Income

Effective gross income (EGI) is the gross potential income – vacancy loss. The EGI is helpful in determining what the gross revenue you could anticipate receiving would be since it factors in potential vacancies which could reduce your revenue at the property.

Monthly Management Fee

The management fee is what it will cost to manage the rental if you hired a property manager or someone else to help out at the rental.

Total Monthly Operating Costs

The total monthly operating cost is how much it will take to operate the property on a monthly basis which includes repairs, maintenance, insurance, and more. 

Keep in mind, older properties could have higher monthly expenses as more repairs might be required. This does not include any major repairs or capital expenditures that might come up in the future.

Net Operating Income (NOI)

The calculator estimates both the monthly and annual net operating income (NOI). NOI is the effective gross income – operating expenses. 

It represents the profitability of your investment by subtracting all of the expenses, aside from mortgage payments, you would expect to incur. 

Annual Debt Service (Mortgage Payments)

The annual debt service is your mortgage payment (both principal and interest). It is essential to know if your mortgage payment, on top of other expenses, will be feasible for you financially, and therefore the annual debt service helps you understand if it makes sense to invest in the property.

Annual Cash Flow

Annual cash flow is calculated by the net operating income – debt service. This is how much you will profit (or lose) from your rental annually after all expenses and mortgage payments are covered. 

Rate of Return Outputs

Cap Rate

The cap or capitalization rate is the rate of return that is expected on a rental property investment. The cap rate does not include financing which is what differentiates it from the effective return on investment (ROI) – it is how you analyze a property based on non-mortgage expenses and income. 

To calculate the cap rate, you divide the net operating income (NOI) by the price or current market value of the property. The cap rate is a convenient way to quickly gain insights and compare rental investment opportunities. 

If you pay cash for a property, the cap rate would be your ROI.

Cash-on-Cash Return

The cash-on-cash return is the return you can expect to earn from the cash you invest in your rental property. In more simple terms, it is what you can expect to earn back in cash flow yearly as a percentage of the total cash you originally invested. 

It is calculated by dividing the after-tax annual cash flow and dividing it by the cash paid to purchase the rental property. 

Annual Gross Rent Multiplier

The gross rent multiplier, or the GRM, is calculated by the total sales price of the property by the annual gross rent. 

This is the measurement of the value of the investment – this helps you understand if the asking price of a property is expensive or in the correct range, especially when you compare it to others in the same area.

Property Detail Outputs

Purchase Price Per Square Foot

The purchase price per square foot is helpful in determining the price relative to its size or if it’s a new build.  

Purchase Price Per Bedroom

The purchase price per bedroom will be useful information when you are renting a property out by room and would like to compare the various property costs by bedroom. 

If you are a landlord near a university and plan to have student renters, you can expect to have leases with multiple tenants which means the price per bedroom will help you determine the ROI.


What is a good ROI for a rental property?

A great ROI for a rental property is typically above 10%, but 5-10% is also an acceptable and more average return. Keep in mind a 10% return is after you’ve calculated all your expenses and costs accurately using the calculator above.

Do I need to use a property manager for my rental?

Hiring a property manager is entirely up to the real estate investor. Having a property manager can be useful if you do not live near your rental or have a different full-time job. 

Having a designated person to help tenants with issues and ensure rent gets paid on time can be beneficial if you cannot do it yourself; however, property management companies charge an average of 10% in fees, so it can be expensive. 

If you opt to go this route instead of managing the rental yourself, make sure you budget accordingly. With TurboTenant, it’s entirely possible and easy to self-manage your rentals.

Where are the best places to buy a rental investment property?

The best places to buy rental investment property will depend on your goals as a property investor as well as where you live. If you live in an expensive area, long-distance landlording is completely doable in this day and age.

You can find the best places to buy a rental investment property in each state here.

How much are typical rental property expenses?

Rental property expenses vary depending on the type of property and where it is located. Typical expenses will include utilities, water, trash, maintenance, insurance, and possibly HOA fees. 

Usually, landlords will charge tenants for some of these items like utilities and water or landlords will have them set up each and pay for it through their own account. 

Calculating these expenses into the rental property calculator is a necessity for it to accurately provide the rate of return.

I bought a property, but how do I become a landlord?

Once you have bought and possibly renovated your rental property, becoming a landlord might seem like a daunting task at first. However, with research and implementing online property management tools, you will be set up for success in no time.

Read this eight-step guide on how to become a landlord for tips on how to make it happen, what you need to know, and helpful resources. As you research what the best online property management software is, make sure you identify your needs and thoroughly research which one has the most features and the best user experience (hint: it’s TurboTenant).

Join the 550,000+ independent landlords who rely on TurboTenant to create welcoming rental experiences.

No tricks or trials to worry about. So what’s the harm? Try it today!