Rental Property ROI
Analyze a potential rental property. Focus on Cash-on-Cash return.
Property Data
Annual net income divided by total cash invested.
Does not include appreciation or tax benefits (depreciation), which can boost total ROI significantly.
Clinical Context & Calculation Details
How to Use This Calculator
Input the purchase price, initial cash investment (down payment + rehab costs), projected monthly rental income, and all total monthly expenses (PITI + maintenance/vacancy buffers).
The calculator reveals the true Monthly Cash Flow and the Cash-on-Cash Return percentage.
Why Doctors Need This
Real estate is a phenomenal wealth-building tool for physicians, offering diversification away from the stock market, tax shelters via depreciation, and passive income.
However, an emotionally-driven purchase of a "cute" house that barely covers its mortgage is a liability, not an asset. Running the objective numbers ensures the property is a true investment producing positive cash flow.
The Math Behind It
Monthly Cash Flow: Monthly Rent Income - Total Monthly Expenses.
Cash-on-Cash Return: (Annual Cash Flow / Total Initial Cash Invested) × 100.
Pearls & Pitfalls
- Pearl: Many successful physician investors target a Cash-on-Cash return of 8-12%. Anything lower might not be worth the headache of dealing with tenants and toilets compared to passive index funds.
- Pitfall: Overlooking the "invisible" expenses. Your mortgage payment is just the start. You must accurately account for property management fees (8-10%), vacancy reserves (5-8%), and CapEx/maintenance (5-10%).
- Pearl: The true power of real estate is "Real Estate Professional Status" (REPS) or the "Short-Term Rental Loophole". If you or your spouse qualify, you can use the paper losses from property depreciation to offset your high W-2 physician income, saving tens of thousands in taxes.
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Editorial Credibility
J.R. Dunigan, DO | Family Medicine Physician & Founder
I founded MedMoneyGuide to provide physicians with unbiased, specialty-specific financial guidance. My goal is to add transparency and credibility to your financial journey.
Frequently Asked Questions
What is Real Estate Professional Status (REPS)?
REPS is a tax status that allows you to use paper losses (like depreciation) from real estate to offset your high W-2 physician income. It requires 750 hours of active real estate management.
Are syndications good for doctors?
Syndications offer passive real estate exposure, perfect for busy doctors, but they require accredited investor status and have long lock-up periods of 5-10 years.