Analyze rental property investments with detailed cash flow analysis, cap rate, IRR, cash-on-cash return, and comprehensive ROI calculations for real estate properties.
Real estate investment analysis involves evaluating the potential returns and risks of property investments. Whether you're considering rental properties, fix-and-flip projects, or commercial real estate, understanding key metrics helps you make informed investment decisions and maximize your returns.
This calculator provides comprehensive analysis including cash flow projections, return on investment calculations, and key performance indicators that professional real estate investors use to evaluate properties and compare investment opportunities.
Measures the property's income potential relative to its price
Shows the annual return on your actual cash investment
Quick comparison tool for similar properties
| Metric | Good Range | Excellent Range | Purpose |
|---|---|---|---|
| Cap Rate | 6-10% | 10%+ | Property income evaluation |
| Cash-on-Cash Return | 8-12% | 12%+ | Cash investment return |
| Cash Flow | $100-500/month | $500+/month | Monthly income generation |
| 1% Rule | 1% | 2%+ | Rent vs purchase price |
| Income Sources | Operating Expenses | Capital Expenses |
|---|---|---|
|
• Base rent • Parking fees • Laundry income • Pet fees • Storage fees |
• Property taxes • Insurance • Maintenance/repairs • Property management • Utilities • Landscaping • Marketing/vacancy |
• Roof replacement • HVAC systems • Flooring upgrades • Appliances • Major renovations |
50% Rule: Operating expenses typically equal about 50% of rental income. This quick rule helps estimate cash flow without detailed expense analysis.
1% Rule: Monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for at least $2,000/month.
2% Rule: More aggressive target where monthly rent equals 2% of purchase price. Harder to achieve but indicates excellent cash flow potential.
70% Rule (Flipping): Purchase price should be 70% or less of after-repair value minus repair costs.
| Loan Type | Down Payment | Interest Rate | Best For |
|---|---|---|---|
| Conventional Investment | 20-25% | Market + 0.5-1% | Standard rental properties |
| Portfolio Lender | 20-30% | Varies | Multiple properties |
| Hard Money | 20-30% | 8-15% | Fix and flip projects |
| Private Money | Varies | 6-12% | Flexible terms needed |
| Cash | 100% | N/A | Maximum cash flow |
Market Risk: Property values and rents can decline due to economic conditions
Vacancy Risk: Properties may sit empty between tenants, reducing income
Maintenance Risk: Unexpected repairs and capital expenditures
Tenant Risk: Non-paying tenants, property damage, eviction costs
Interest Rate Risk: Rising rates affect refinancing and property values
Residential rental properties can be depreciated over 27.5 years
| Tax Benefit | Description | Annual Limit |
|---|---|---|
| Depreciation | Deduct property value over time | Property value ÷ 27.5 |
| Operating Expenses | Deduct all business expenses | No limit |
| Interest Deduction | Deduct mortgage interest | No limit |
| 1031 Exchange | Defer capital gains taxes | No limit |
Hold and Rent: Continue collecting rental income and benefit from appreciation
Sell for Profit: Realize capital gains when market conditions are favorable
1031 Exchange: Trade for a larger property and defer capital gains taxes
Refinance: Pull out equity while maintaining ownership and rental income
Start Small: Begin with one property to learn the business and gain experience
Geographic Focus: Concentrate in areas you know well for better market understanding
Diversification: Spread risk across different property types and locations
Scale Gradually: Reinvest profits and use equity to acquire additional properties