Real Estate Investment Calculator
Analyze rental property investments with detailed cash flow, ROI, cap rate, and cash-on-cash return calculations. Factor in all income and expenses.
Total purchase price of the property
Initial cash down payment (typically 20-25% for investment)
One-time closing fees (typically 2-3% of purchase price)
Annual mortgage interest rate
Mortgage term length
Expected monthly rent collected
Expected yearly property value increase (historical avg: 3-4%)
Yearly property taxes
Yearly property insurance premium
Yearly maintenance and repairs (typically 1% of property value)
Expected vacancy percentage per year (typical: 5-10%)
Management fee as % of rent (if using PM, typically 8-10%)
What is a good ROI for real estate investment?
Good ROI varies by market and strategy: Rental properties typically yield 8-12% annually (including appreciation + rental income). House flipping targets 15-25% per project. REITs average 10-12% long-term. Cap rates of 8-10% are solid for rental properties. Compare to stock market (10% historical) and factor in leverage benefits, tax advantages, and work required. Location and property type matter significantly.
How much should I budget for rental property expenses?
Use the 50% rule: Expect 50% of gross rent goes to expenses (not including mortgage). Breakdown: Property tax (10-15%), insurance (5-10%), maintenance (10-15%), vacancy (5-10%), property management (8-10%), utilities (if you pay), HOA fees, and capital reserves. For a $2,000/month rental, budget $1,000 for expenses. This leaves $1,000 for mortgage and profit.
What is cash-on-cash return and why does it matter?
Cash-on-cash return measures annual cash flow vs. cash invested (down payment + closing costs). Formula: (Annual Cash Flow / Total Cash Invested) × 100. Example: $30,000 invested, $3,000 annual cash flow = 10% CoC return. This shows actual cash returns, unlike cap rate which ignores financing. Good CoC is 8-12%. It helps compare leveraged vs all-cash investments.
Should I invest in real estate or stocks?
Real estate pros: Leverage (buy $400k property with $80k), tax benefits (depreciation, 1031 exchanges), inflation hedge, tangible asset. Cons: Illiquid, high entry cost, tenant/maintenance headaches, concentration risk. Stocks pros: Liquid, low entry ($100), diversified, passive. Cons: No leverage, no tax shelters, volatility. Many investors do both: stocks for liquidity/retirement, real estate for passive income/tax benefits.