Return on a property investment. The Real Estate ROI Calculator takes purchase price, purchase costs and repairs, monthly rent, monthly expenses (tax, insurance, maintenance, vacancy), expected sale price, holding period and returns total return on investment plus annualized return, total gain (rent + appreciation), net rental income over the period. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Property returns depend on assumptions about rent, occupancy, costs and appreciation that are easy to make optimistic. Enter conservative figures and remember that transaction costs, taxes and vacancy periods are real. Use the worked example below to check the maths against your own figures.
How the Real Estate ROI Calculator works
Property returns come from rent and appreciation together. This all-cash calculation shows the unlevered return; with a mortgage the cash-on-cash calculator is the better measure.
Worked example
With the example values (purchase price of $300,000, purchase costs and repairs of $20,000, monthly rent of $2,200, monthly expenses (tax, insurance, maintenance, vacancy) of $600, expected sale price of $360,000, holding period of 5 years), the total return on investment is 42.50%; annualized return 7.34%, total gain (rent + appreciation) $136,000.00, net rental income over the period $96,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is total return on investment calculated?
ROI = (sale price − total cost + net rent over the period) ÷ total cost.
Which figures do I need?
Purchase price, purchase costs and repairs, monthly rent, monthly expenses (tax, insurance, maintenance, vacancy), expected sale price, holding period. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Which costs are easy to forget?
Vacancy periods, maintenance, property tax, insurance, brokerage on purchase and sale, and stamp duty. Include them for a realistic return.
