Return on Rental Property Investment Calculator

Complete the green boxes and this calculator will instantly display the ROI, cash flow, and IRR for this investment property. Adjust any of the required or optional inputs and the results will instantly update to reflect the changes.

Note: Assumptions are hidden by default. Expand the assumptions line to change the assumptions.

Step 1 – Purchase Assumptions

require Required Inputs
optional Optional Inputs
Home Value
$   Price paid including capital improvements
Initial investment
       % down = $
Debt
  $
Interest rate
      % interest rate of mortgage
Assumptions (optional inputs)

Step 2 – Income Assumptions

Monthly Rent
  $  Gross monthly rental income Find estimated rental rates here
Cap Rate
    %
Assumptions (optional inputs)

Step 3 – Operating Cost Assumptions

Property Improvements
    $  initial expenditures to get home ready for rental
Assumptions (optional inputs)

Step 4 – Property Sales Assumptions

Sales Price
  $  
Assumptions (optional inputs)

Step 5 – Taxes, Inflation, & Return Assumptions

Land value
     % of purchase price = $
Tax basis
  $
Property tax
    % of property value Find estimated property tax rates here
Assumptions (optional inputs)

Expected Rate of Return & Cash Flow Summary

Return on Cash Invested
  
Projected 5 year IRR
Internal Rate of Return (IRR): IRR calculations are commonly used to evaluate the desirability of investments or projects. The higher a project’s IRR, the more desirable it is to undertake the project. Assuming all projects require the same amount of up-front investment, the project with the highest IRR would be considered the best and undertaken first.
http://en.wikipedia.org/wiki/Internal_rate_of_return

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Projected Cash Flow
Initial
Year 1
Year 2
Year 3
Year 4
Year 5
Net Total
 

hideTable 1 – Cash Flows & ROI Details

Cash Flow Details Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total
Purchase Investment          
Net Cash Flow (see Table 2)
Sales Price        
Selling costs        
Taxable Gain
See the following Sales Transaction Details for calculations.

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Taxes        
Note Payoff (see Table 4)        


Total Annual Cash Flow


  Year 1 Year 2 Year 3 Year 4 Year 5 Total


ROI Details – Net cash flow


Present Value – Cash flows discounted by hurdle rate


Walk Away Price – Breakeven price between renting and selling


Sales Transaction Details         Year 5 Total


Sales Price        
Selling costs        


Cash Proceeds (before taxes and note repayment)  
Depreciated Basis  
Taxable Gain  
Depreciation Recapture Tax
Depreciation Recapture is
when real property is sold at a gain and depreciation had been claimed, the owner is required to pay a tax at ordinary rates to the extent of the depreciation on residential real estate.

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Capital Gains Tax
Note Payoff (see Table 4)


Cash from Sale (proceeds less taxes and less debt)


 

hideTable 2 – Yearly Financial Projections Details

hideTable 3 – ROI Table Details

hideTable 4 – Year Ending Balances Details