Frequently Asked Questions
Everything you need to know about calculating your property's ROI.
What is ROI in real estate?
Return on Investment (ROI) measures the profit made on an investment relative to its cost. In real estate, it shows how effectively your investment capital is generating income, usually expressed as a percentage.
What is a Cap Rate?
Capitalization Rate (Cap Rate) is the ratio of Net Operating Income (NOI) to property asset value. It represents the potential rate of return on a real estate investment, assuming it is purchased with cash without financing.
What is a good ROI for a rental property?
A 'good' ROI varies by market and investor strategy, but generally, an ROI between 8% and 12% is considered strong for residential rental properties. However, lower risk properties might yield 5-7%, while higher risk might yield 15%+.
How do I calculate Net Operating Income (NOI)?
NOI is calculated by taking your Gross Annual Income (total rent collected) and subtracting all operating expenses (taxes, insurance, maintenance, property management). It does not include mortgage payments (debt service).
Why should I include a vacancy rate?
No property is rented 100% of the time forever. Including a vacancy rate (typically 5-10%) accounts for the time between tenants and provides a more realistic estimate of your actual actual annual income.
Does this calculator account for a mortgage?
This specific calculator focuses on the Cap Rate, which evaluates the property's performance independent of financing. If you have a mortgage, your 'Cash on Cash Return' will differ from the Cap Rate.
What expenses should I include?
You should include property taxes, landlord insurance, HOA fees, property management fees, routine maintenance, and utilities not paid by the tenant. Do not include your mortgage principal or interest.
Is my financial data saved?
No. This tool runs entirely in your browser. We do not have a database, and we do not save, store, or transmit your financial inputs.
Can I save my results?
Yes! Once you calculate your ROI, you can use the 'Save PNG' or 'Save PDF' buttons to download a branded summary of your calculation for your records or to share with partners.
Is this tool completely free?
Yes, the Lease ROI Calculator is 100% free to use, provided by Dapplesoft to help investors make better decisions.