Rental Property ROI Calculator
Calculate net operating income (NOI) and net ROI for a rental property from purchase price, annual rental income, and annual expenses.
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Maintenance, property tax, insurance, and other annual costs.
Net ROI
7.00%
Net Operating Income
$21,000
Expense Ratio
30.0% of rent
How Rental Property ROI Is Calculated
This calculator measures a rental property's actual return after operating costs, not just its gross rent. Subtract annual expenses — maintenance, property tax, insurance, and other recurring costs — from annual rental income to get net operating income (NOI). Dividing NOI by the purchase price gives a net ROI percentage that reflects the real cash a property produces relative to what you paid for it.
ROI = (NOI / Purchase Price) × 100
Example
A property bought for $300,000 that generates $30,000 in annual rent with $9,000 in annual expenses (maintenance, tax, insurance) has an NOI of $21,000 — a net ROI of 7%. That's the figure to compare against other properties or investment options, since it already accounts for the cost of running the property.
Common Use Cases
- Screening rental properties on a true after-expense return, not just gross yield.
- Comparing multiple properties with different expense structures on equal footing.
- Deciding whether rising maintenance or tax costs still leave an acceptable return.
- Benchmarking rental ROI against stocks, bonds, or other investment classes.
FAQs
How is this different from rental yield?
A basic rental yield calculation often only looks at gross rent against price. This calculator deliberately subtracts operating expenses first, producing net operating income and a net ROI that better reflects actual profitability — useful once you know your real running costs.
What counts as an annual expense here?
Include maintenance and repairs, property tax, insurance, property management fees, and any other recurring holding costs. Leave out the mortgage payment itself if you want to see the property's unlevered return before financing costs.
What's considered a good ROI for a rental property?
Many investors target a net ROI (or cap rate) of 6-10%, though acceptable ranges vary widely by market, property type, and how much appreciation potential is factored in separately.