Paydown is principal paid off by the mortgage over the hold — check your amortization schedule.
Calculation details
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Use this result
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What does this calculator estimate?
Rental property ROI measures your total return on the cash you invested — combining cash flow, appreciation, and principal paydown against your down payment. Enter your down payment, annual cash flow, appreciation, value, years, and principal paydown to see the full return.
- ROI = total return ÷ cash invested × 100
- Includes cash flow + appreciation + principal paydown
- A multi-year total return, not a single-year yield
What full ROI includes
Cash flow is only part of a rental's return. Total ROI adds appreciation (the property growing in value) and principal paydown (the mortgage shrinking — your tenants build your equity). The calculator combines all three against the cash you invested.
Limitations to watch for
Appreciation is a projection, not a promise — 2–4% annual is a common planning range. The paydown assumes a standard amortizing mortgage. The tool doesn't model taxes, selling costs, or vacancy beyond what you enter.
How to use it in practice
Enter realistic annual appreciation and the actual paydown from your amortization schedule. Compare the total ROI against other investments. Remember the cash flow is taxable and appreciation is taxed on sale — factor taxes into your decision.
['Enter the property value, down payment, and annual cash flow.', 'Enter the expected appreciation and years.', 'Read the total return and ROI.']
How this calculator works
Formula
Total return = cash flow + appreciation + principal paydown. ROI = total return ÷ cash invested × 100. The tool projects these over a chosen horizon.
Worked example
On a $300,000 property with $60,000 down: $3,600 annual flow + $15,000 appreciation + $3,000 paydown = $21,600/year on $60,000 = 36% ROI.
Assumptions to verify
- Appreciation is constant at the entered rate.
- The mortgage amortizes normally.
- Taxes and selling costs are excluded.
Frequently asked questions
How do I calculate rental ROI?
Total return (cash flow + appreciation + paydown) ÷ cash invested: $21,600 ÷ $60,000 = 36%.
What's included in total return?
Annual cash flow, property appreciation, and the principal paid down by the mortgage.
How is this different from cash-on-cash?
Cash-on-cash counts only cash flow; ROI adds appreciation and paydown.
What appreciation should I assume?
2–4% annual is a common planning range — use conservative numbers.
Is this return guaranteed?
No — appreciation is a projection, and rents/expenses change. It's a scenario.
How do taxes affect it?
Cash flow is taxable income and gains are taxed on sale — the tool is pre-tax.
What's a good rental ROI?
Many investors target 8–12%+ annual total ROI in good markets; higher in riskier ones.
Cite this tool
BoringToolsKit. “Rental Property ROI Calculator.” boringtoolskit.com/rental-property-roi-calculator/ (reviewed 2026-08-25). Free to reference in articles, syllabi, and answer posts with a link.
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