Rental Property ROI

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.

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.

Monthly Cash Flow: Monthly Rent Income - Total Monthly Expenses.

Cash-on-Cash Return: (Annual Cash Flow / Total Initial Cash Invested) × 100.

• 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.