Real Estate ROI Calculator
The LV5 Capital Real Estate ROI Calculator estimates the total return on investment of a rental or multifamily real estate deal. Inputs include purchase price, down payment percent, closing costs, rehab budget, annual cash flow, projected appreciation, hold period in years, and selling costs. The calculator outputs total cash invested, cumulative cash flow over the hold, net sale proceeds, total profit, equity multiple, total ROI, and annualized ROI. Use it to compare deals, stress-test exit assumptions, and evaluate how leverage and appreciation drive returns on direct multifamily ownership.
Frequently asked questions
What is real estate ROI?
Return on investment (ROI) for real estate is the total profit you earn on a property divided by the total cash you put in. It rolls cash flow, principal paydown, and appreciation into one percentage so you can compare different investments. ROI does not account for the timing of cash flows — for that, use IRR.
How is ROI calculated on a rental property?
Total Profit = (Sale Proceeds − Selling Costs − Loan Payoff) + Cumulative Cash Flow − Total Cash Invested. ROI = Total Profit ÷ Total Cash Invested. Total Cash Invested usually includes down payment, closing costs, and rehab capital. Annualized ROI divides cumulative ROI by the hold period in years.
What is a good ROI on real estate?
Direct multifamily owners often target 12-20% annualized ROI on a value-add deal over a 5-7 year hold. Stabilized core properties may target 8-12%. Passive Limited Partner ROIs commonly target 14-18% annualized when measured as IRR on a 5-7 year hold. Returns vary by market, leverage, sponsor execution, and risk profile.
Does ROI include appreciation?
Yes. A complete ROI calculation includes ongoing cash flow during the hold, principal paydown on the mortgage, and the gain on sale (which captures appreciation). Excluding appreciation gives you only the cash-on-cash return — a more conservative number that ignores any equity buildup.
ROI vs. cash-on-cash return — what's the difference?
Cash-on-cash return is just annual cash flow divided by cash invested. It ignores appreciation, principal paydown, and the eventual sale. ROI includes all of those. Cash-on-cash is best for comparing year-1 income; ROI (or IRR) is best for measuring total wealth created.
What is the difference between ROI and IRR?
ROI is a single, time-blind percentage. IRR (Internal Rate of Return) accounts for when cash flows arrive: $10K returned in Year 1 is worth more than $10K returned in Year 7. For multi-year hold real estate deals, IRR is the more accurate return metric. Many sponsors quote both to give a complete picture.
Why does leverage increase ROI?
When you put down 25-30% and borrow the rest at fixed rates, the property's gross appreciation is calculated on the full purchase price, but the gain accrues to your equity slice. A 3% appreciation on a $5M property is $150K — and on $1.25M of equity that's a 12% boost from appreciation alone. Leverage amplifies both gains and losses.
How does an LV5 Capital syndication generate ROI?
LV5 Capital's multifamily syndications generate Limited Partner ROI through three channels: monthly cash distributions during the hold, accelerated depreciation passed through on a K-1 (which shelters distribution income), and a capital event at sale or refinance. Most offerings target a 6-9% preferred return and a 1.7x-2.2x equity multiple over 5-7 years.
Other calculators
Explore the rest of LV5 Capital's investor calculator suite: Real Estate ROI Calculator · Real Estate IRR Calculator · Equity Multiple Calculator · Cash-on-Cash Return Calculator · 1031 Exchange Calculator. Read more in the multifamily investing guide or schedule a consultation.