Real Estate Investment Calculator

Cap rate measures a property's return based on its full purchase price, ignoring financing entirely, which makes it useful for comparing properties as pure assets regardless of how each buyer finances them. Cash-on-cash return instead measures return only against the actual cash you put in — your down payment plus closing costs — which is why a leveraged property with a smaller down payment often shows a much higher cash-on-cash return than its cap rate, since the same dollar of profit is being measured against a smaller invested amount.

Renovation ROI in this calculator reflects typical value-recouped percentages by project type, in the same pattern the annual Cost vs. Value report (published by Zonda/JLC, formerly Remodeling Magazine) tracks nationally year after year: smaller cosmetic projects like paint and landscaping tend to return a value increase close to or even exceeding their cost, since they're relatively inexpensive fixes that meaningfully improve buyer perception. Major structural projects like a full kitchen remodel cost far more in absolute dollars and typically recoup a smaller percentage of that cost, even though the total value they add to the home is often larger in raw dollar terms.

Leverage is the key driver — you're only putting down a fraction of the purchase price as cash, but you benefit from appreciation, cash flow, and mortgage paydown on the full property value, which amplifies your effective return relative to the actual cash invested. This same leverage effect cuts both ways in reality: it magnifies losses just as much as gains if property values decline or cash flow turns negative, which this calculator's return projection doesn't stress-test.

Boot is any value you receive that isn't reinvested into like-kind replacement property — most commonly, trading down into a less expensive property than the one you sold, which leaves cash or reduced equity in your pocket that the IRS still taxes even within an otherwise tax-deferred exchange. This calculator flags boot whenever your new property price is lower than your current property's value, since trading up avoids boot entirely by reinvesting the full proceeds.