Rental Property ROI Calculator 2026
Analyze cash flow, returns, and tax benefits for rental property investments. Get a deal score and 5-year wealth projection instantly.
2,500+
Properties Analyzed
$487
Avg. Monthly Cash Flow
4.8/5
User Rating
“Finally, a calculator that shows the complete picture including tax benefits.”
— Sarah M., DFW Investor
Property Details
Land is not depreciable. Typical range: 15-25% for residential.
Financing
Operating Expenses
Texas avg: 2.2% (no state income tax)
% of rent for repairs and CapEx
5% = ~18 days vacant per year
0% = self-managed, 8-12% = professional
Excludes mortgage payment (debt service)
Growth Assumptions
DFW historical avg: 3-4% annually
DFW historical avg: 4-5% annually
Higher brackets benefit more from depreciation tax savings
Note: These assumptions affect multi-year projections and exit strategy calculations. Actual results will vary based on market conditions.
Monthly Cash Flow
-$675
Annual Cash-on-Cash
-10.1%
Negative return
Deal Score
17/100 — PASS
Numbers do not support this investment
Cash Flow Waterfall
-$8,094/year
Returns Breakdown
DFW avg: 5.5%
Target: 8%+
Includes cash flow + appreciation + equity + tax savings
Lower is better. Target: <12x
Lender minimum: 1.25
Net Operating Income
$14,260/yr
Annual Debt Service
$22,354/yr
Total Cash Invested
$80,500
Loan Amount
$280,000
Tax Benefits (Depreciation)
Annual Depreciation
$10,182
Over 27.5 years
Tax Savings (at 24%)
$2,444
$204/month
Effective Monthly Cash Flow
Including tax benefit
-$471/mo
How Depreciation Works
Accelerate Your Depreciation
Cost segregation can front-load deductions to Year 1
Deal Score
17/100
Score Breakdown
Low cash-on-cash return
Below market average cap rate
Negative cash flow - property loses money monthly
Property cannot cover debt service
Good total return including appreciation
Numbers do not support this investment
5-Year Projection
| Year | Rent | Cash Flow | Equity Buildup | Tax Savings | Total Wealth |
|---|---|---|---|---|---|
| Year 1 | $26,400 | -$8,094 | $2,844 | $2,444 | $11,194 |
| Year 2 | $27,192 | -$7,381 | $5,894 | $4,887 | $23,866 |
| Year 3 | $28,008 | -$6,647 | $9,165 | $7,331 | $38,075 |
| Year 4 | $28,848 | -$5,891 | $12,671 | $9,775 | $53,883 |
| Year 5 | $29,713 | -$5,112 | $16,432 | $12,218 | $71,352 |
Cumulative Cash Flow
-$33,126
Equity from Paydown
$16,432
Appreciation
$75,829
Property Value (Yr 5)
$425,829
What to Do Next
Ready for Deeper Analysis?
See how this fits into your complete tax picture with our Multi-Year Tax Planner.
What This Calculator Shows You
Cash Flow Analysis
See monthly and annual cash flow with a detailed waterfall breakdown of all income and expenses.
Return Metrics
Cap rate, cash-on-cash, total ROI, and debt coverage ratio compared to DFW market benchmarks.
Tax Benefits
Depreciation deductions and tax savings calculated based on your tax bracket for the full picture.
Deal Scoring
Get a 0-100 deal score based on key metrics to quickly evaluate if a property is worth pursuing.
How to Analyze a Rental Property Investment
Key Metrics Every Investor Should Know
Successful rental property investing requires understanding several key metrics that together paint a complete picture of an investment's potential.
Cap Rate (Capitalization Rate)
Cap rate measures the property's return independent of financing. It's calculated as Net Operating Income (NOI) divided by property value. In DFW, cap rates typically range from 5-7%. A higher cap rate indicates potentially better cash flow, but may also signal higher risk or deferred maintenance.
Cash-on-Cash Return
This metric shows your actual return on the cash you invested. If you put $77,000 down and net $6,000 in annual cash flow, your cash-on-cash return is 7.8%. Most investors target 8-12% cash-on-cash for rental properties.
Total ROI (Including All Wealth-Building Components)
Cash flow is just one piece of the puzzle. Total ROI includes:
- Cash Flow — Monthly income after expenses
- Appreciation — Property value increase (4% avg in DFW)
- Equity Buildup — Mortgage principal paydown by tenants
- Tax Savings — Depreciation deductions reducing taxable income
When you add all four components, a property with modest cash flow can actually deliver 15-20%+ total returns.
The Power of Depreciation
Rental properties offer a unique tax advantage: depreciation. The IRS allows you to deduct the building value (excluding land) over 27.5 years. On a $350,000 property with 20% land value, that's a $10,182 annual deduction. At a 24% tax bracket, that's $2,444 in tax savings — money that goes directly to your bottom line.
DFW Market Considerations
The Dallas-Fort Worth market presents unique opportunities and challenges:
- No state income tax (more take-home profit)
- Higher property taxes (~2.2%) offset by no state income tax
- Strong population growth driving appreciation and rent increases
- Diverse economy reducing vacancy risk
Frequently Asked Questions
What is a good cap rate for DFW rental properties?
The average cap rate in the Dallas-Fort Worth area ranges from 5-7% depending on the neighborhood and property type. Class A properties in desirable areas may have lower cap rates (4-5%) while Class B/C properties in emerging areas can yield 6-8%. A cap rate above the market average suggests a better investment opportunity, but must be balanced against property condition and tenant quality.
How much cash flow should a rental property generate?
Most investors target a minimum of $200 per door per month in positive cash flow for single-family rentals. For multi-family properties, $100-150 per unit is common. However, this depends on your investment strategy. Some investors accept lower cash flow for properties with higher appreciation potential or in premium locations.
What expenses should I include in my rental property analysis?
A thorough analysis should include: mortgage payment (P&I), property taxes (2.2% average in Texas), insurance, maintenance reserves (5-10% of rent), vacancy reserves (5-8%), property management fees (8-12% if applicable), HOA dues, and any utilities you pay. Don't forget one-time costs like closing costs and any initial repairs.
How do tax benefits affect my rental property return?
Rental properties offer significant tax benefits through depreciation. You can deduct the building value (excluding land) over 27.5 years, which often creates a "paper loss" even when you're cash flow positive. This depreciation deduction reduces your taxable income, effectively increasing your after-tax return. A property generating $500/month cash flow might have an additional $200+/month in tax savings.
Should I pay cash or finance a rental property?
Financing typically provides better returns through leverage. With a $100K down payment, you could buy one $500K property cash or five $100K down properties financed. While financing increases risk, it also amplifies returns. Cash-on-cash return and total ROI are usually higher with financing because you're earning returns on the bank's money. However, paying cash provides more security and stronger cash flow.
What is the 1% rule for rental properties?
The 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price. A $300K property should rent for $3,000/month. While useful for quick evaluation, this rule is often difficult to achieve in high-cost markets like DFW. Many successful investors use 0.7-0.8% in competitive markets, focusing on appreciation and tax benefits alongside cash flow.
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