1. What is Rental Investment ROI?

ROI (Return on Investment) for rental properties measures the profitability of your investment by comparing annual net income to the total amount invested. It's a key metric for evaluating rental property performance in New Zealand's real estate market.

2. How Does the Calculator Work?

The calculator uses the ROI formula:

Where:

• Annual Rental Income — Total rent collected in NZD per year
• Annual Expenses — All property-related expenses in NZD per year
• Total Investment — Total capital invested in the property in NZD

Explanation: The formula calculates the percentage return you earn annually on your property investment after accounting for all expenses.

3. Importance of ROI Calculation

Details: Calculating ROI helps investors compare different properties, assess investment performance, and make informed decisions about buying, holding, or selling rental properties in New Zealand.

4. Using the Calculator

Tips: Enter all values in NZD. Include all expenses (mortgage, rates, insurance, maintenance, property management) in annual expenses. Total investment should include purchase price plus any renovation costs.

5. Frequently Asked Questions (FAQ)

Q1: What's a good ROI for NZ rental properties?
A: Typically 4-8% is considered decent in NZ markets, though this varies by location and property type.

Q2: Should I include mortgage principal payments in expenses?
A: No, only include the interest portion of mortgage payments as expenses for ROI calculation.

Q3: How does this differ from cash-on-cash return?
A: ROI considers total investment while cash-on-cash return only considers actual cash invested (excluding leveraged amounts).

Q4: Are there limitations to ROI calculation?
A: ROI doesn't account for property appreciation, tax benefits, or future income/expense changes.

Q5: Should I use gross or net rental income?
A: Always use net income (after vacancy allowances and expenses) for accurate ROI calculations.