What is a good cap rate for rental property in India?

A good cap rate in India typically ranges from 3-5%. Metro cities like Mumbai often see 2-3% due to high property prices, while tier-2 cities can offer 4-6%. Generally, any cap rate above 4% is considered attractive for residential rentals.

How do you calculate rental property ROI?

Rental ROI can be calculated as: Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) × 100. Cash Flow = Annual Rent - All Expenses - Loan EMI. Include down payment, closing costs, and renovation in total cash invested.

What is the difference between Cap Rate and Cash on Cash Return?

Cap Rate measures property performance: NOI / Property Value, ignoring financing. Cash on Cash Return measures investor return: Cash Flow / Cash Invested, accounting for leverage. A property with 4% cap rate could yield 8-12% cash on cash with 80% financing.

What expenses should I include in rental property calculation?

Include: property taxes (0.1-0.5% of value), insurance (0.1-0.2%), maintenance reserve (10% of rent), vacancy allowance (5-8%), society/HOA charges, property management (if applicable), and loan EMI if financed. Don't forget income tax implications.

Is rental property a good investment in India 2025?

Rental property can be good for long-term wealth building. While yields (2-4%) are modest compared to other investments, benefits include: capital appreciation (5-10% annually in growing cities), tax deductions on loan interest, leverage opportunities, and inflation hedge. Location selection is critical.

Rental Property ROI Calculator

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Estimate cap rate and cash-on-cash return.
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