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Rental Property ROI & Cap Rate Calculator

Enter a property's price, financing, rent, and expenses to calculate cap rate, gross & net rental yield, cash-on-cash return, DSCR, GRM, and payback period — in any of nine major world currencies.

Purchase

$
$10k $5M
$
$0 $100k
$
$0 $200k

Financing

%
0% 100%
%
1% 18%

Income

$
$100 $50k
$
$0 $10k
%
0% 30%
%
0% 20%

Recurring Operating Expenses (Annual)

$
$0 $50k
$
$0 $20k
$
$0 $20k
$
$0 $30k
$
$0 $20k
%
-5% 15%

Investment Analysis

Verdict
Negative Cash Flow
Cap Rate
5.79%
Gross Rental Yield
9.60%
Net Rental Yield
5.79%
Cash-on-Cash Return
-1.98%
DSCR
0.93x
Gross Rent Multiplier
10.4
Monthly Cash Flow
-$109/mo
Payback Period
Never (negative cash flow)
Annual Income Breakdown

How gross rent shrinks down to net operating income and finally net cash flow.

Gross Income Vacancy & Expenses Debt Service Net Cash Flow
10-Year Equity Growth

Property value growing at your appreciation rate, and the loan balance shrinking as you pay it down.

Property Value Loan Balance Your Equity
Annual Operating Expense Composition

Where your operating dollars go, excluding mortgage debt service.

Property Tax Insurance Maintenance Management HOA & Other

Purchase Price Scenario Comparison

See how negotiating the purchase price up or down changes your cap rate and cash-on-cash return, using your financing and rent assumptions above.

ScenarioPriceCap RateCash-on-CashDSCR
Below Asking$270,0006.43%0.93%1.03x
Asking Price$300,0005.79%-1.98%0.93x
Bidding War$330,0005.26%-4.41%0.85x

Worked Example: $300,000 Property at $2,400/mo Rent

A buyer purchases a property for $300,000, financing 80% with a 30-year loan at 6.75%. The unit rents for $2,400/month, with a 5% vacancy assumption and 8% management fee.

After property tax, insurance, and maintenance, net operating income lands at a level that produces a cap rate of 5.79% and a net rental yield of 5.79%. Once the mortgage payment is factored in, the buyer's actual cash-on-cash return on their $66,000 invested comes to -1.98%, with a DSCR of 0.93x — comfortably above the 1.20x most lenders require.

At -$109/month in net cash flow, the buyer recovers their initial cash investment in roughly Never (negative cash flow) — before accounting for any appreciation or loan paydown, both of which further improve total return over time.

How to Calculate Rental Property Cap Rate and ROI

Step-by-step method to evaluate a rental property's cap rate, cash-on-cash return, and financing risk.

  1. 1. Enter purchase details: Input the property price, closing costs, any repair budget, and your currency.
  2. 2. Enter financing terms: Input down payment percentage, interest rate, and loan term, or model an all-cash purchase.
  3. 3. Enter income and expenses: Input monthly rent, other income, vacancy rate, management fee, and recurring operating expenses.
  4. 4. Review the ratios: Compare cap rate, cash-on-cash return, DSCR, GRM, and payback period to decide whether the deal meets your investment criteria.

What Do These Rental Property Ratios Mean?

Evaluating a rental property well means looking past a single number. Cap rate (net operating income ÷ property price) tells you the unleveraged return the property itself generates, ignoring how you financed it. It's the number most useful for comparing two different properties side by side, since it's unaffected by your personal down payment or loan terms.

Cash-on-cash return answers a different question: given the actual cash you put in — down payment, closing costs, repairs — how much of that comes back to you each year after the mortgage is paid? Because financing amplifies both gains and losses, cash-on-cash return is usually the more personal, decision-relevant metric once a loan is involved.

DSCR and GRM round out the picture: DSCR tells you (and your lender) how comfortably rental income covers the mortgage payment, while GRM offers a rough, expense-agnostic screening ratio for quickly comparing many listings before doing a full analysis on the best few.

The Formulas Behind Each Metric

  • Cap Rate = Net Operating Income ÷ Purchase Price
  • Gross Rental Yield = Annual Gross Rent ÷ Purchase Price
  • Net Rental Yield = Net Operating Income ÷ Purchase Price (after vacancy and operating expenses)
  • Cash-on-Cash Return = Annual Net Cash Flow (after debt service) ÷ Total Cash Invested
  • DSCR = Net Operating Income ÷ Annual Mortgage Payment
  • Gross Rent Multiplier = Purchase Price ÷ Annual Gross Rent

Supported Currencies

Every ratio on this page — cap rate, yield, cash-on-cash return, DSCR, GRM — is currency-independent, so your analysis stays valid no matter which currency you enter figures in.

CodeCurrencySymbol
USDUS Dollar$
EUREuro€
GBPBritish Pound£
INRIndian Rupee₹
AUDAustralian DollarA$
CADCanadian DollarC$
JPYJapanese Yen¥
AEDUAE Dirhamد.إ
SGDSingapore DollarS$

Frequently Asked Questions

Q: What is a good cap rate for a rental property?

Most investors treat a cap rate between 4% and 10% as reasonable, with 5-8% common for stable residential rentals in established markets. Higher cap rates usually signal higher risk or a less desirable location; lower cap rates usually signal a safer, more competitive market.

Q: What is the difference between cap rate and cash-on-cash return?

Cap rate measures net operating income against the full property value, ignoring financing. Cash-on-cash return measures actual annual cash flow (after mortgage payments) against only the cash you personally invested — down payment, closing costs, and repairs. Cash-on-cash is the more relevant number if you used a loan.

Q: How is net operating income (NOI) calculated?

NOI equals gross rental income, minus vacancy loss, minus operating expenses (property tax, insurance, maintenance, management fees, HOA). It excludes mortgage principal and interest, which are financing costs rather than operating costs.

Q: What is DSCR and why does it matter?

The Debt Service Coverage Ratio (DSCR) is net operating income divided by the annual mortgage payment. A DSCR above 1.0 means the property's income covers its debt payments; most commercial and many residential investment lenders require at least 1.20-1.25x before approving a loan.

Q: What is the Gross Rent Multiplier (GRM)?

GRM is the property price divided by its annual gross rental income, before any expenses. It is a quick, rough screening tool — a lower GRM generally suggests a better-priced property relative to its rent, but it should never replace a full cap rate or cash-on-cash analysis.

Q: Does this calculator work in currencies other than US dollars?

Yes. All figures can be entered and displayed in US Dollar, Euro, British Pound, Indian Rupee, Australian Dollar, Canadian Dollar, Japanese Yen, UAE Dirham, or Singapore Dollar. Every ratio (cap rate, yield, cash-on-cash, DSCR, GRM) is currency-independent since it is a percentage or multiple, so the analysis is valid regardless of which currency you choose.

Q: Should I use the 1% rule or the 50% rule instead of these ratios?

The 1% rule (monthly rent should be at least 1% of price) and the 50% rule (operating expenses average roughly 50% of rental income) are fast mental screening shortcuts, not substitutes for a full analysis. This calculator gives you the precise cap rate, cash-on-cash return, and DSCR so you are not relying on rough approximations before making a purchase decision.

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