Real Estate ROI Calculator
Calculate your total return on investment and annualized ROI for any real estate deal. Compare your performance against market benchmarks.
Investment Details
Include all cash invested: down payment, closing costs, rehab, etc.
Cash Flow (Over Holding Period)
For rentals: total rent collected and total operating expenses. For flips: any interim income and holding costs.
ROI Analysis
Outstanding return! Well above typical real estate benchmarks.
Return Breakdown
ROI Comparison
Understanding ROI
- •Total ROI shows your total percentage return over the entire holding period.
- •Annualized ROI (CAGR) is better for comparing investments of different time periods.
- •Real estate returns come from: appreciation + cash flow + equity paydown + tax benefits.
- •This calculator shows appreciation and cash flow. Equity paydown is a forced savings return.
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Understanding Real Estate ROI
Return on Investment (ROI) is the ultimate measure of how well your real estate investment performed. It combines all sources of return into one comprehensive metric.
ROI Formulas
Total ROI = (Total Return ÷ Initial Investment) × 100
Annualized ROI = ((Ending Value ÷ Beginning Value)^(1/years) - 1) × 100
Components of Real Estate Returns
- Appreciation: Increase in property value
- Cash Flow: Rental income minus expenses
- Equity Paydown: Mortgage principal paid by tenants
- Tax Benefits: Depreciation and deductions (not in this calc)
Why Annualized ROI Matters
A 50% total ROI sounds great, but was it earned in 1 year or 10 years? Annualized ROI (CAGR) gives you the equivalent annual return, making it easy to compare investments.
Frequently Asked Questions
How do you calculate ROI on real estate?▼
ROI = (Total Return ÷ Total Investment) × 100. Total Return includes appreciation (value increase) plus net cash flow (income minus expenses). Total Investment includes down payment, closing costs, and any improvements.
What is a good ROI for real estate?▼
A good annualized ROI for real estate is typically 10-15%+. This beats the historical stock market average of ~10%. However, ROI varies significantly by strategy - flips may target 20%+ while rentals might accept 8-12% with appreciation upside.
What is the difference between ROI and cash-on-cash return?▼
Cash-on-cash only measures annual cash flow return on cash invested. ROI is broader and includes appreciation, equity buildup, and total returns over the entire holding period. ROI gives a more complete picture.
What is annualized ROI (CAGR)?▼
Annualized ROI (CAGR - Compound Annual Growth Rate) converts total return into an equivalent annual percentage. This lets you compare investments held for different time periods on an equal basis.
Should I include equity paydown in ROI?▼
Yes, equity paydown (principal reduction) is part of your return since it increases your net worth. This calculator shows it separately, but a complete ROI analysis should include it.