1. What is Monthly ROI for Rental Properties?

Monthly Return on Investment (ROI) measures the profitability of a rental property investment on a monthly basis. It shows what percentage of your investment cost you're earning back each month, helping you compare different investment opportunities.

2. How Does the Calculator Work?

The calculator uses the Monthly ROI formula:

Where:

• \( \text{Net Income} \) — Annual rental income minus all expenses ($/year)
• \( \text{Investment Cost} \) — Total amount invested in the property ($)

Explanation: The formula calculates annual ROI first, then divides by 12 to get the monthly percentage return.

3. Importance of Monthly ROI Calculation

Details: Monthly ROI helps investors evaluate cash flow performance, compare different properties, and assess whether the investment meets their financial goals.

4. Using the Calculator

Tips: Enter your net annual income (rent minus all expenses) and total investment cost. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good monthly ROI for rental properties?
A: Typically 0.5%-2% monthly ROI is considered good, but this varies by market and investment strategy.

Q2: Should I include mortgage payments in expenses?
A: Yes, all expenses including mortgage, taxes, insurance, maintenance, and vacancies should be included in the net income calculation.

Q3: How does this differ from cap rate?
A: Cap rate shows annual return without financing, while ROI includes all costs and financing effects.

Q4: Why calculate monthly instead of annual ROI?
A: Monthly ROI helps investors understand cash flow timing, which is crucial for managing expenses and planning.

Q5: Does this account for property appreciation?
A: No, this calculates cash-on-cash return only. Total ROI would include appreciation when you sell.