Finance category
Mortgage, loan, investing, tax, and money calculators.
Buy and Hold ROI Calculator
A buy-and-hold rental produces returns four ways. This calculator combines them — cash flow, appreciation, principal paydown, and tax shield — to compute total and annualized ROI over your planned hold.
Total ROI over hold
223.71%
Annualized ROI
12.46%
Cumulative cash flow
$30,000
Appreciation gain
$108,334
Principal paydown
$31,197
Tax shield value
$25,658
depreciation × rate
How the math works
Buy-and-hold total return blends four wealth levers: cash flow (monthly), appreciation (home value growth), principal paydown (tenant-funded amortization), and tax benefits (depreciation shield). A single property often produces 15–25%+ annualized total return once all levers are counted.
Sensitivity to assumptions matters. Cash flow and principal paydown are usually the most reliable. Appreciation varies with market; tax shield depends on your ability to use passive losses. Don't overweight appreciation in your decision.
How to Use
- Enter purchase price and down payment.
- Enter loan rate and closing costs including rehab.
- Enter net monthly cash flow.
- Set annual appreciation assumption. National average ≈ 3%; high-growth metros 5–7%.
- Enter planned hold and marginal tax rate.
Frequently Asked Questions
What's a realistic appreciation rate?
3% is a conservative national average since 1970 (inflation-matched). High-growth metros have run 5–7% for long stretches. Use your own market's 20-year appreciation, not short-term spikes or drops.
Why include principal paydown?
Because tenants fund it. Over 10 years on a $225k loan at 7.5%, tenants will pay down ~$30k of principal. That's equity you gain without contributing cash out of pocket.
Can I actually use the tax shield?
Only if you qualify: $25k passive loss allowance (AGI under $100k, phasing out by $150k), or real estate professional status, or passive income to offset. Without either, the shield is deferred until sale (reduces recapture).
What's a good total ROI?
15–25% annualized is typical for buy-and-hold. Lower in very tight markets (coastal) where appreciation carries most of the return; higher in cash-flow markets (Midwest). Over 30% annualized usually requires leverage or flip mechanics.
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