How to read this result
In the default example, annual cash flow is $23,000.00. Purchase price and setup cost are context. Cash ROI uses the separate total-cash-invested input; it does not infer financing or equity.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Subtract annual operating expenses and debt service from annual revenue. Divide the resulting annual cash flow by the separately entered total cash invested for cash ROI.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Property price (USD)
- Property acquisition price. Minimum: 0.
- Setup/furnishing cost (USD)
- Initial setup and furnishing cost. Minimum: 0.
- Annual revenue (USD/year)
- User-entered annual vacation rental revenue. Minimum: 0.
- Annual operating expenses (USD/year)
- Operating costs. Minimum: 0.
- Annual debt service (USD/year)
- User-entered debt service. Minimum: 0.
- Total cash invested (USD)
- Cash invested including down payment and setup. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Property price | $450,000.00 |
| Setup/furnishing cost | $30,000.00 |
| Annual revenue | $70,000.00 |
| Annual operating expenses | $25,000.00 |
| Annual debt service | $22,000.00 |
| Total cash invested | $130,000.00 |
| Item | Default scenario |
|---|---|
| Annual cash flow | $23,000.00 |
| Cash ROI | 17.69% |
Assumptions and limitations
Simple annual return measure; excludes appreciation, sale value and income tax.
Purchase price and setup cost are context. Cash ROI uses the separate total-cash-invested input; it does not infer financing or equity.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Property price and setup cost are context; the model does not derive cash invested from them. Enter all actual equity and setup cash in total cash invested.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- Fannie Mae — Selling Guide B3-3.8-03, Short-Term Rental (09/02/2026)Current short-term-rental income context and vacancy/maintenance treatment.
Frequently asked questions
Why do price and setup cost not change cash ROI directly?
Cash ROI uses total cash invested, which may differ from price plus setup because of financing. The tool does not infer an equity contribution.
Does cash ROI include an eventual sale?
No. It is an annual cash-flow measure and does not include appreciation, principal paydown or sale proceeds.