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Real Estate Calculator
Price, rent, expenses and appreciation go in; two numbers come out. This real estate calculator gives you total profit over your hold and an honest annualized return — a CAGR, clearly labeled, not an IRR.
See how this works on a $300,000 rental property — 3 real examples
Total profit if you sell after 10 years
$0
Annualized return (CAGR)
—
Sale proceeds after costs
$0
Total rental cash flow
$0
Cash invested
$0
Wealth if you sold in each year
If you sold in year…Profit & return by exit year
| Year | Cash flow to date | Sale proceeds | Total profit | Annualized |
|---|
How your real estate investment return is calculated
This is an all-cash model: no mortgage, no interest, no loan paydown. Five steps:
cash invested = price + closing costs + rehab
annual cash flow = 12 · rent · (1 − vacancy) − operating expenses
sale proceeds = price · (1 + appreciation)years · (1 − selling cost)
total profit = sale proceeds + years · annual cash flow − cash invested
annualized = ((sale proceeds + total cash flow) ÷ cash invested)1/years − 1
Assumptions to know: monthly rent compounds each year at the annual rent growth rate you set (leave it at 0 to hold rent flat), while operating expenses are held constant; the property appreciates from the purchase price (rehab dollars are sunk cost, not an after-repair value bump); and the annualized figure is a CAGR of aggregate ROI, not an IRR — interim rent checks are summed rather than time-weighted, which typically understates IRR slightly for cash-flowing properties. If losses ever wipe out the position (ending wealth at or below zero), no annualized rate exists and we show “—” instead of a fake number.
Same property, three exits
A $300,000 purchase with $316,000 all-in after closing and repairs. The sale date and the price assumption do most of the deciding.
Ten years at 3.5% growth
profit over the hold$219,397
- Rent contributes $141,840 over the decade — $14,184 a year after an 8% vacancy allowance and expenses.
- The sale nets $393,557 once 7% selling costs come off the appreciated price.
- On $316,000 invested, the combined result works out to 5.41% a year.
Two engines pull together here: a decade of rent and a decade of price growth.
Load this example (opens in a new tab)The early exit
profit over the hold$35,884
- Three years of rent add $42,552, the same yearly pace as the long hold.
- The sale nets $309,332 — selling costs claw back most of three years of appreciation.
- The yearly return shrinks to 3.65%, well behind the ten-year figure.
Selling costs are a fixed toll; a short hold gives them fewer years to fade.
Load this example (opens in a new tab)A decade with no price growth
profit over the hold$104,840
- Rent still delivers its $141,840; appreciation delivers nothing.
- The sale returns $279,000 on the $300,000 paid — 7% selling costs, no growth to cover them.
- The result is 2.91% a year, earned by the tenants alone.
Strip out the price assumption and what remains is a 2.91% rent business.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Real estate investment returns, in plain English
- Two numbers matter. Total profit (dollars in your pocket) and the annualized return on your real estate investment (how hard each dollar works) — a big total can still hide a mediocre yearly rate.
- It’s a CAGR, not an IRR. Interim rent is summed rather than time-weighted, so it slightly understates IRR on cash-flowing deals — never compare it to a broker’s IRR.
- All-cash on purpose. No mortgage isolates the property’s own economics — the same math works for a residential or commercial rental; layer financing on afterward with a rental-property analysis.
- Three inputs decide it. Appreciation, selling costs (6–8% off the exit) and vacancy — and now rent growth, which compounds every year of the hold.
- Screen fast. The 1% rule (rent ≈ 1% of price) and 50% rule (expenses ≈ half of rent) flag deals worth a full analysis.
Related calculators
Frequently asked questions
How do you calculate return on a real estate investment?
To find the return on a real estate investment, add up everything the property gives back — rental cash flow during the hold plus net sale proceeds — and subtract everything you put in: purchase price, closing costs and rehab. The difference is your total profit; dividing ending wealth by cash invested and annualizing gives a yearly rate. On the default scenario in this real estate investment calculator ($300,000 purchase, $2,100 rent, 3.5% appreciation, 10 years), that works out to roughly $219,000 of profit, about 5.4% per year.
What counts as a good return on a real estate investment?
Most buy-and-hold investors want an all-cash (unlevered) return of 6–10% per year; below the stock market’s long-run ~10% average, a rental has to justify itself with leverage, tax benefits or diversification. Cap rates on US residential rentals typically run 4–8% depending on the market. Financed deals are usually judged on cash-on-cash return instead, where 8–12% is a common target.
Why does this calculator show CAGR instead of IRR?
IRR credits cash received early more than cash received late and needs an iterative solver over the full cash-flow timeline. We show the simpler, fully transparent figure: the compound annual growth rate of (sale proceeds + total cash flow) over cash invested. For a property with positive rent flows this slightly understates IRR, because it treats every rent check as if it arrived at sale — we label it CAGR so you never compare it against a broker’s IRR quote unknowingly.
What is the 1% rule in real estate?
A screening shortcut: monthly rent should be at least 1% of the purchase price — $3,000 of rent on a $300,000 property. Few properties in expensive coastal markets pass it, and passing doesn’t guarantee profit; it flags deals worth analyzing in full. Use it to filter, then run the real numbers here.
How do appreciation and selling costs affect the result?
The sale price is projected by compounding the purchase price at your appreciation rate, then reduced by selling costs — typically 6–8% for agent commissions, transfer taxes and closing fees. On a $300,000 property appreciating 3.5% for 10 years, the projected sale is about $423,000, but 7% selling costs remove nearly $30,000 of it. Ignoring selling costs is one of the most common ways spreadsheets overstate returns.
What should I include in operating expenses?
Everything it costs to run the property except a mortgage: property taxes, insurance, maintenance and repairs, property management, HOA dues, utilities you pay, and reserves for big-ticket replacements. A useful planning benchmark is the 50% rule — over long holds, operating expenses tend to consume about half of gross rent on older properties.
What vacancy rate should I use?
National residential vacancy runs roughly 6–7%, so 8% — about one lost month per year — is a safe planning default. Tight urban markets may justify 5%, while seasonal or rural rentals can run 10% or more. Vacancy comes straight off gross rent, so it directly reduces every cash-flow figure in the projection.
What is cash-on-cash return, and why isn’t it shown here?
Cash-on-cash divides annual pre-tax cash flow by only the cash you put in (down payment plus costs), so it measures the return on a financed deal. This calculator models an all-cash purchase, so its annualized return already is the return on total cash. For a mortgage-financed analysis with debt service, DSCR and cash-on-cash, use a dedicated rental real estate investment calculator.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .