Investment Property ROI Analyzer

Most real estate investors target a cash-on-cash return of 8–12% annually. Higher leverage (lower down payment) amplifies cash-on-cash returns — and risk. In high-appreciation markets, a 6–8% cash-on-cash return combined with equity buildup can still be excellent. Always evaluate cash-on-cash alongside cap rate and your total return goals.

Cap rates of 4–7% are typical for stable, low-risk properties in strong markets. Higher cap rates (8–12%+) indicate higher risk or value-add opportunities. The right cap rate depends on your financing costs, market, and return requirements. Use this calculator to compare properties on equal footing.

DSCR (Debt Service Coverage Ratio) = Net Operating Income ÷ Annual Debt Service. Lenders typically require DSCR ≥ 1.20–1.25 for investment property loans. A DSCR above 1.25 is considered strong. Below 1.0 means the property doesn't generate enough income to cover its mortgage — a red flag for lenders and investors alike.

Cash-on-cash return measures annual cash yield on your initial cash invested. IRR (Internal Rate of Return) accounts for the timing of all cash flows over the entire holding period, including equity buildup, appreciation, and sale proceeds. IRR is a more complete measure of investment performance — use it to compare properties with different hold durations.

Yes — if you plan to hire a professional property manager, include their fee (typically 8–10% of gross rent) in your operating expenses. Even if you self-manage, consider an "opportunity cost" equivalent. Property management costs are often the difference between a marginally positive and a genuinely profitable deal.

This calculator uses standard real estate investment analysis methods (NOI-based cap rate, amortization schedule for mortgage, and simplified IRR projection). Results are estimates — actual returns depend on exact financing terms, market conditions, tax treatment, and unexpected expenses. Use this tool for initial screening; conduct full due diligence before any investment decision.