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Rental Property ROI Calculator
Twenty-three inputs, twenty-two numbers back, and a ten-year projection that knows how your state taxes a rental. No email required — the results are on this page.
Written by Johana Williams • Reviewed By: Peter Evering • Last updated: August 20, 2026
The old adage is that time is money, but, in the case of a rental property the tax line is money and the tax line does not sit still! On average, when using a national rental calculator, you enter approximately one property tax figure and it holds for thirty years. Without a state rule behind it, who knows? The more years a projection runs from that frozen number, when the assessment is climbing underneath it, the more cash flow an owner can lose.
One of the best ways to ensure the least amount of drift between the deal on paper and the deal you actually own is to start the tax line at the rate a buyer pays after closing. Selecting a state here does that, and then grows the line at the ceiling that state applies. Those ceilings range from anywhere to 2% in California under Proposition 13, 3% in Oregon under Measure 50 and 3% in New Mexico under §7-36-21.2, up to 8% in Nevada on a property that is not owner-occupied. For a capped state such as Oregon's, the drift over a decade would be far smaller than in Nevada.
Based upon the way most working investors underwrite a purchase, the rest of the inputs are what you would expect: purchase, financing, income and operating costs, with every default editable. The numbers appear as you type. The main point is; nothing here is gated, emailed or held back for a form!
Where is the property?
Tax growth ceiling applied: per year. Rent cap: .
Purchase
Financing
Income
Operating expenses
Projection assumptions
Legal ceiling here:
Your results
Negative at down. This property covers its mortgage at about down — or if rent reaches .
Operating expenses exceed collected rent, so no down payment makes this cash-flow. Check the expense lines.
Computed live. Nothing here is emailed or stored.
Monthly operating statement
| Gross potential income | |
| Less vacancy | |
| Effective gross income | |
| Management fee | |
| Property taxes | |
| Insurance | |
| Maintenance + reserves | |
| HOA, utilities, flat fees | |
| Total operating expenses | |
| Net operating income | |
| Mortgage (P&I) | |
| Cash flow |
Every metric
-year projection
Property tax grows at a year — the ceiling applies — while rent grows at .
| Yr | Rent | Tax | NOI | Cash flow | Value |
|---|---|---|---|---|---|
Want these numbers checked against the real market?
We manage rentals in 5 states and can tell you what the property actually rents for, what it costs to run, and what the tax bill becomes after close.
Get a rental analysisWhat the calculator is doing
During the hopefully pleasant and profitable period of owning a rental, one needs to bear in mind the term "net operating income". Any property, whether bought with a loan or for cash (regardless of how carefully the owner screens the applicants) cannot escape vacancy, and the statement starts there.
Based upon the perspective of most working professionals in the property management industry, here is the order in which the lines come off:
- Gross potential income — rent plus other monthly income such as parking, storage, or a pet fee that is not a deposit
- Less vacancy — what turnovers and unit prep cost you across the year
- Effective gross income — the figure a management fee should be charged against
- Less operating expenses — management, property taxes, insurance, HOA dues, maintenance, capital reserve, owner-paid utilities, and any flat annual charge such as a leasing fee
- Net operating income — what the building earns before the mortgage
One of the most common questions many owners have is "why is the fee charged on effective gross income rather than on the rent?" While there is no easy answer to this question, the short version is that a manager billing against gross potential is billing you for the months nobody paid.
The calculator runs the statement before the mortgage is applied, and again after debt service comes off. It uses those two points as the basis to separate the building's return from yours. An example of the first would be cap rate, which is drawn from net operating income and ignores the loan completely. However, cash-on-cash return, which divides annual cash flow by the down payment, closing costs and rehab you actually paid, moves the moment the financing changes. With two buyers closing on the same building at the same price in the same week, arriving at an identical cap rate and completely different cash-on-cash returns could prove to be a surprise to any owner!
Reserves are not optional
Please remember, the maintenance and capital reserve lines should not be zeroed out to make a deal work. Carpet, flooring, paint, appliances and roofs all age and require periodic maintenance and replacement. A roof lasts twenty-five years and then costs $18,000; a water heater goes at year nine. The most important rule about a projection that survives contact with the property resides in the reserve, and a rental that only cash-flows once you set that line to zero is not cash-flowing.
Reading the results
Keep in mind that every metric here has limitations, as they are only estimates and cannot take into account abstract factors that may play a part in the decision-making process or influence the value of a property, such as future market changes.
- Cap rate. The cap rate is an estimation of the general performance of a property by calculating the NOI divided by the building's total capital cost. This is a simple way to compare properties but note the limitations of this figure. It is not calculated with your financing, so anything from the mid-4s up is defensible in coastal California, while Las Vegas, Albuquerque and Spokane routinely price higher.
- Cash on cash return. This figure compares the cash you actually invested to the cash the property returns. Divide the annual cash flow by the down payment, closing costs and rehab you paid. The end result is the percentage of your own money you earn back each year, which is the figure to hold against an index fund rather than against the cap rate.
- DSCR. Financial institutions and lenders use this figure to assess the risk of a loan. If you need to take out a loan to make the investment, you should calculate this metric. Below 1.0 the property does not cover its own mortgage, most portfolio lenders want 1.20 or better, and a DSCR loan on a single rental is usually quoted at 1.25.
- Break-even occupancy. One of the biggest income losses is during vacancy, because the property generates no income but still requires operating expenses. Although every property owner tries to minimize vacancy, a break-even figure of 94% leaves very little room, and one long turnover puts the year underwater.
- The 1% rule. It is usually a good idea to screen with more than one ratio — just be sure you are applying the same rent and price assumptions if you are comparing multiple properties. On the West Coast this one is close to unachievable, and it is shown because people look for it rather than because failing it disqualifies a deal in Seattle or San Diego.
The same property, bought two ways
Calculating ROI is more straightforward for cash transactions, or buying a property in full. Let's look at an example.
Paying cash. You pay $90,000 in full for a rental property. After closing costs and remodeling costs of $15,000, your total investment cost is $105,000. You sign a one-year lease and rent the property for $950 a month, totaling $11,400 in revenue after one year. Property expenses such as utilities, maintenance, insurance and taxes total $100 a month, or $1,200 after one year, so your annual gain is $10,200. Dividing the annual gain by the original investment cost, the return is $10,200 ÷ $105,000 = 9.7%.
Financing it. The property price is the same, but you take out a mortgage with a down payment of 20%. The down payment totals $18,000, and closing and remodeling costs total $15,000, so your original investment cost is $33,000. On a 30-year loan at a fixed 4%, the monthly principal and interest on the borrowed $72,000 is $343.74, or $4,124.88 after one year. Property expenses remain $1,200, so total expenses are $5,324.88 against the same $11,400 of revenue, and your annual gain is $6,075.12. Dividing by the original investment cost, the return is $6,075.12 ÷ $33,000 = 18.4%.
Same building, same rent, same year — and nearly double the return, because leverage shrinks the denominator. Note what did not change: the property's net operating income, and therefore its cap rate. For the purpose of understanding the difference these examples were over-simplified and included minimal variables, which is what the calculator above is for.
Why the state matters more than the spreadsheet suggests
If you take two identical duplexes bought for $650,000, one in Reno and one in Portland, with the same rent, the same operating costs and the same loan, the difference shows up in the tax line by year ten. Under state law, the Nevada bill can have grown 8% a year while the Oregon bill was held to 3%. That gap has the potential to compound into tens of thousands of dollars of cumulative cash flow, and cost you more on the Nevada property than you thought — and no national calculator will show it to you.
Also, it is important to note that the seller's tax bill in California is not the bill you will pay. Because Proposition 13 reassesses at the purchase price, a property held since 1998 might carry a $3,100 annual bill that becomes $9,600 the day escrow closes. Buyers who model the seller's number are the ones surprised in February. New Mexico's 3% cap works the same way and lapses the year after a sale, which is why an Albuquerque bill can jump on a long-held rental and then settle into a slow climb.
Diligent and current figures are also necessary in order to let a projection respect the ceiling your state puts on the income side:
- Washington — 9.683% for 2026
- Oregon — 9.5% for 2026
- California — 8.2% to 8.8% across our metros under AB 1482
- Nevada and New Mexico — no cap at all
Those are ceilings rather than forecasts, and the market sets the real number well below the legal limit in most years. But if your projection assumes 12% annual rent growth in Tacoma, the law says no.
What we assume, and where we stop
So the next time you run a property through this and decide to make an offer, keep the assumptions in mind: rent and operating costs grow at the rates you set, the tax line grows at the state ceiling, the loan amortizes properly, and the sale costs 6% at disposition.
Don't see depreciation, your marginal rate, or a 1031 exchange in the outputs? Those depend on the rest of your return, and they belong with your CPA rather than in a browser — along with the recapture waiting at the end of an exchange.
The calculator also assumes you hold the loan you entered. The main point is; DO NOT model a bridge loan or a 5/1 ARM at today's rate alone — run it twice, once now and once at what a reset would do!
The rules the calculator applies, by state
Property tax growth ceilings and rent-increase limits as of August 2026. These change — the rent caps annually — so check the current figure before you sign anything.
California
tax growth cap 2% • rent cap 8.2%–8.8%Proposition 13 reassesses the property at your purchase price when you buy, then caps assessed-value growth at 2% a year. Model the tax on what you pay, not on the seller's bill — theirs may be based on a 1990s basis.
AB 1482 caps increases at 5% plus regional CPI, to a 10% ceiling — 8.2% to 8.8% across our California metros for Aug 2026–Jul 2027. Single-family homes and condos are exempt when you serve the required notice.
Washington
tax growth cap 3% • rent cap 9.683%Washington assesses at market value every year with no per-parcel cap, so the tax line tracks appreciation more closely here than in the other four states.
HB 1217 caps increases at the lesser of 10% or 7% plus CPI — 9.683% for 2026 — with no increase in the first 12 months and 90 days' notice. Seattle adds a 180-day notice and relocation assistance on larger increases.
Oregon
tax growth cap 3% • rent cap 9.5%Measure 50 taxes the lesser of real market value and maximum assessed value, and caps growth in that maximum at 3% a year, so Oregon tax bills drift up slowly and predictably.
SB 611 caps 2026 increases at 9.5%, with a 15-year exemption for new construction and 90 days' notice. Portland adds relocation assistance running from $2,900 to $4,500 on 10%-plus increases.
Nevada
tax growth cap 8% • rent cap noneNevada caps how fast a tax bill can rise, but the rental cap is up to 8% a year — not the 3% owner-occupants get — unless every unit rents at or below the HUD limits. Over a ten-year hold that difference compounds into real money.
Nevada has no rent cap. NRS 118A.300 requires 60 days' notice for an increase on a month-to-month tenancy, and deposits are capped at three months' rent.
New Mexico
tax growth cap 3% • rent cap noneNew Mexico works like California in miniature: §7-36-21.2 caps growth in a residential valuation at 3% a year, and the cap drops away the year after the property changes hands, so the assessment resets to market on sale. The default rate here reflects Bernalillo County, which runs above the statewide median of roughly 0.63%.
The Rent Control Preemption Act (§47-8A-1) bars any New Mexico city or county from capping rents, and a 2025 attempt to repeal it died in committee. SB 267 did tighten the fee rules from June 2025: late fees fell from 10% to 5% and are now calculated on rent alone, and raising a fee set in the lease takes 60 days' written notice.
Frequently asked questions
What is a good ROI on a rental property? +
It depends which return you mean, and it is essential to be clear on that before making any financial decisions. Cash-on-cash returns of 6% to 10% are a reasonable target for a leveraged single-family rental, and cap rates across our markets typically run from the mid-4s to the low 6s depending on the metro. A Spokane property will usually show a higher cap rate than a comparable one in San Jose, and that gap reflects expected appreciation rather than a better deal.
What is the difference between cap rate and cash-on-cash return? +
The calculation is different depending on which one you want, and the most important part is determining which variables are included or excluded. Cap rate divides net operating income by the total cost of the property and excludes your financing entirely, which is what makes it useful for comparing buildings. Cash-on-cash divides annual pre-tax cash flow by the cash you actually invested, so it includes your down payment, your rate and your closing costs. The same building can produce one cap rate and a dozen different cash-on-cash returns.
Should I include property management fees in an ROI calculation? +
Yes. Being a landlord is a full time job, and whether or not you hire a property manager that labor has a market price, so leaving the fee out overstates the return on a property you might later hand off. Full-service management typically runs 6% to 10% of collected rent depending on the market and the property type. The fee should be charged against collected rent rather than gross potential rent, which is why this calculator applies it after vacancy.
How much should I budget for maintenance and capital expenditures? +
Appliances and systems like the air conditioning may need to be replaced, and those events require upwards of thousands of dollars. A common starting point is 5% to 10% of rent for routine maintenance and another 5% to 10% for capital reserves, with older properties at the higher end. The reserve covers the items that fail on a long cycle — roof, HVAC, water heater, flooring.
Does this calculator account for California's Proposition 13? +
It does. It is essential to consider as many variables as possible in a calculation, and in California the tax line is one that changes the moment you buy: Prop 13 triggers a reassessment on sale, so the tax is calculated from your purchase price rather than from the seller's assessed value, and the ten-year projection grows it at the 2% annual cap. The default rate of 1.15% reflects the 1% base rate plus the local voter-approved bonds that appear on most California bills.
What DSCR do lenders require on a rental property? +
Most lenders underwriting an investment property want to see at least 1.20, and dedicated DSCR loan programs commonly quote 1.25. Higher risk loans may come with additional fees or higher interest rates, increasing the total investment cost. A ratio of 1.0 means the property's net operating income exactly covers its mortgage payments with nothing to spare.
Cap Rate Calculator
Comparing buildings rather than financing? The cap rate view runs the same engine with the property-level metrics up front.
Open the Cap Rate Calculator →Own the property, not the spreadsheet
Utopia Management has managed rentals across California, Washington, Oregon, Nevada and New Mexico since 1994. Tell us the address and we will tell you what it rents for and what it costs to run.
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