Calculate ROI Real Estate
Real estate ROI varies by property type. Calculate returns for residential, commercial, REITs, and development projects with appropriate metrics for each.
How the Calculate ROI Real Estate works
Choose property type and enter relevant data. Get specialized calculations: residential cap rates, commercial NOI analysis, development IRR, or REIT dividend yields with tax implications.
Different real estate investments require different analysis. This calculator adapts to your investment type, providing the right metrics for informed decisions.
How it works
Tutorial
Real estate ROI varies dramatically by property type—residential rentals emphasize cash flow, commercial properties focus on NOI and cap rates, while development projects require IRR analysis. Using the wrong metric for your property type leads to poor investment decisions.
You have two options: use the calculator above to select your property type for appropriate metrics, or follow this guide covering ROI calculation across different real estate categories.
The Formula
| Property Type | Primary ROI Formula |
|---|---|
| Residential Rental | (Annual Cash Flow ÷ Cash Invested) × 100 |
| Commercial Property | (NOI ÷ Purchase Price) × 100 = Cap Rate |
| Fix & Flip | (Net Profit ÷ Total Investment) × 100 |
Step-by-Step Calculation
Let’s calculate ROI for a residential rental property.
Step 1: Determine Cash Invested
Calculate total out-of-pocket investment:
| Investment Component | Amount |
|---|---|
| Down Payment (20%) | $60,000 |
| Closing Costs | $9,000 |
| Initial Repairs | $15,000 |
| Total Cash Invested | $84,000 |
Calculation: $60,000 + $9,000 + $15,000 = $84,000
Step 2: Calculate Annual Cash Flow
Determine yearly cash remaining after all expenses:
| Cash Flow Item | Amount |
|---|---|
| Annual Rental Income | $36,000 |
| Operating Expenses | -$10,800 |
| Mortgage Payments (P&I) | -$16,200 |
| Annual Cash Flow | $9,000 |
Calculation: $36,000 – $10,800 – $16,200 = $9,000
Step 3: Calculate Real Estate ROI
Divide annual cash flow by cash invested:
| Step | Calculation | Result |
|---|---|---|
| Divide cash flow by investment | $9,000 ÷ $84,000 | 0.1071 |
| Convert to percentage | 0.1071 × 100 | 10.71% |
Final Answer: Your real estate ROI is 10.71%
What This Means
A 10.71% cash-on-cash return represents solid performance for leveraged residential real estate. This excludes appreciation and principal paydown, which typically add another 3-7% in total returns, making real estate a powerful wealth-building vehicle.
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