Real Estate Investment ROI Calculator (US)
Investment Summary
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Down Payment
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Monthly Mortgage Payment
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Monthly Cash Flow Analysis
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Annual Cash Flow
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Return Metrics
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Cap Rate
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Gross Rent Multiplier (GRM)
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Debt Service Coverage Ratio (DSCR)
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5-Year ROI
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Future Value Projections
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Amortization Schedule (First Year)
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5 Smart Investment Tips Based on Your Results
Key Real Estate Investment Terms
Cash-on-Cash Return
The annual cash flow divided by the total cash invested, expressed as a percentage. It measures the cash income earned on the cash invested in a property.
Cap Rate (Capitalization Rate)
The ratio between the net operating income (NOI) and the property's market value or purchase price. It helps investors evaluate the potential return on investment regardless of the financing method.
Gross Rent Multiplier (GRM)
The ratio of the property's price to its gross annual rental income. A lower GRM typically indicates a better investment opportunity.
Net Operating Income (NOI)
The annual income generated by a property after deducting operating expenses, but before mortgage payments and income taxes.
Debt Service Coverage Ratio (DSCR)
The ratio of net operating income to annual debt service (mortgage payments). Lenders typically require a DSCR of at least 1.2, meaning the property generates 20% more income than needed for mortgage payments.
After Repair Value (ARV)
The estimated value of a property after all necessary repairs and renovations have been completed. Used primarily in fix-and-flip investments.
Cash Flow
The income remaining after all expenses and mortgage payments have been paid. Positive cash flow means the property is generating more income than it costs to own and maintain it.
Amortization
The process of paying off a debt (like a mortgage) over time through regular payments. Each payment consists of both principal and interest, with the proportion of principal increasing over time.
5 Smart Real Estate Investment Tips
- Location Still Matters - Even with changing work patterns, property in desirable school districts and with access to amenities tends to appreciate faster and maintain higher occupancy rates.
- Plan for Vacancies - Always include a vacancy rate in your calculations (typically 5-8% depending on the market). No rental property maintains 100% occupancy year after year.
- Budget for Capital Expenditures - Beyond regular maintenance, set aside funds for major replacements like roofs, HVAC systems, and appliances. A good rule is 1-2% of the property value annually.
- Consider Cash Flow Over Appreciation - While appreciation can lead to significant gains, consistent positive cash flow protects you during market downturns and provides stable returns.
- Understand Tax Benefits - Real estate investors can benefit from deductions for mortgage interest, property taxes, operating expenses, depreciation, and more. Consult with a tax professional to maximize these advantages.