What is a good ROI on rental property?

Good rental property ROI varies by market and strategy. General benchmarks: Cap rate: 6-10% (8%+ in Indianapolis is strong), Cash-on-cash return: 8-12% (10%+ is excellent), Total ROI (including appreciation): 15-25% annually. Factor in your risk tolerance, time commitment, and alternative investment returns. Indianapolis typically offers higher cash flow than coastal markets.

How do you calculate cap rate on rental property?

Cap Rate = Net Operating Income (NOI) ÷ Property Value × 100. Example: Property worth $200,000, annual rent $24,000, expenses $8,000. NOI = $24,000 - $8,000 = $16,000. Cap Rate = $16,000 ÷ $200,000 = 8%. Note: Cap rate ignores financing—it measures the property's return assuming all-cash purchase. Use it to compare properties.

What is cash-on-cash return and how is it calculated?

Cash-on-cash return measures your actual cash invested vs annual cash flow. Formula: Annual Cash Flow ÷ Total Cash Invested × 100. Example: You invest $50,000 (down payment + closing + repairs), annual cash flow after all expenses and mortgage = $5,000. Cash-on-cash = $5,000 ÷ $50,000 = 10%. This is the most relevant metric for leveraged investors.

How to Calculate ROI on Rental Property: Complete Guide with Examples | Leaseway Property Management Blog

HomePricing Reviews Blog Investors

317-445-9151 Get Free Quote

HomeBlogInvestor TipsHow to Calculate ROI on Rental Property: Complete Guide with Examples

Investor Tipsroi

Premier property management serving Indianapolis and Central Indiana since 2008.

3250A W 86th St, Suite 1134
Indianapolis, IN 46268
(317) 445-9151

Services

All Services

calculator

rental property

How to Calculate ROI on Rental Property: Complete Guide with Examples

Leaseway Team

Property Management Experts

December 30, 202514 min read

Investor calculating ROI on rental property investment

Article Summary

Learn multiple methods to calculate rental property ROI. Understand cap rate, cash-on-cash return, and total ROI with real Indianapolis examples.

Published: December 30, 2025Updated: January 1, 2026

Understanding your rental property's return on investment is crucial for making smart investment decisions. This guide covers all the ways to measure ROI...

Sources & References

BiggerPockets - ROI Calculator Guide
Investopedia - Rental Property Returns
NARPM - Investment Property Analysis

Frequently Asked Questions

About the Author

Leaseway TeamProperty Management Experts

The Leaseway Team brings together decades of combined experience in Indianapolis property management, real estate investing, and landlord-tenant relations. Our experts are dedicated to helping property owners maximize their investments.

Licensed Indiana Property ManagersNARPM Members500+ Properties Managed

View all

Market Analysis

2026 Indianapolis Rental Market Forecast: What Investors Need to Know

Jan 1512 min read

Aerial view of Indianapolis neighborhoods with rental investment potential

Back to All Articles

1.Why ROI Matters
2.Capitalization Rate (Cap Rate)
3.Cash-on-Cash Return
4.Total Return on Investment
5.Indianapolis Examples
6.What's a Good ROI?
7.How to Improve Your ROI

Get Weekly Landlord Tips

Join 2,500+ Indianapolis property owners. Market insights, tax tips, and actionable advice delivered weekly.

No spam. Unsubscribe anytime. We respect your privacy.

Company

About Us
Blog
Contact Us
Our Team
For Investors
Reviews

Resources

Free Resources
FAQ
Self-Manage vs. PM
Leaseway vs. Others
ROI Calculator
Rent Calculator
Market Report
Landlord Guide

Service Areas

Indianapolis
Carmel
Fishers
Noblesville
Greenwood
Westfield
Zionsville
Avon
Brownsburg
Plainfield
Lawrence
Speedway
Whitestown
McCordsville
Pendleton
Mooresville
Bargersville

Property Management in Indianapolis Neighborhoods

Broad Ripple•Fountain Square•Mass Ave•Downtown•Irvington•Meridian-Kessler•Butler-Tarkington•Speedway•Lawrence•Beech Grove•Southport•Castleton•Geist•Nora•SoBro•Woodruff Place•Lockerbie Square•Fall Creek Place•Herron-Morton•Old Northside•Chatham Arch•Holy Cross•Garfield Park•Fletcher Place•Bates-Hendricks

BBBAccredited NARPMMember YelpListed GoogleBusiness

125 articles10+ years experience