What is Cap Rate in real estate investing?

Cap Rate (Capitalization Rate) is the ratio of Net Operating Income (NOI = Gross Rent minus Operating Expenses) to property acquisition price: Cap Rate = (NOI / Property Price) × 100.

What is a good rental yield in Indian cities?

In India, gross residential rental yield typically ranges between 2.5% to 4.5% per year, while commercial real estate yields range higher between 6.5% to 9.5% per year.

How is capital appreciation calculated for property in India?

Capital appreciation is the increase in property market value over time. Annualized CAGR return is calculated as: ((Final Valuation / Initial Price)^(1 / Holding Years) - 1) × 100.

What is Equity Multiple in property investments?

Equity Multiple is total cash distributions received plus sale proceeds divided by initial cash invested. An equity multiple of 2.0x means your initial investment doubled.

How do operating expenses affect net rental yields?

Operating expenses like property taxes, society maintenance fees, insurance, and vacancy periods reduce gross rent, resulting in net operating income (NOI).

Is real estate leverage (home loan) good for returns?

Using a home loan increases return on equity (ROE) if capital appreciation and rental yield exceed borrowing interest rates, but increases financial risk during market downturns.

How does capital gains tax impact property returns in India?

Long-term capital gains (LTCG) on property held over 24 months is taxed at 12.5% without indexation (or 20% with indexation for pre-2024 assets) under Budget 2024 provisions.

How to calculate total net profit on property sale?

Total Net Profit = Final Sale Value + Net Cumulative Rent Received - Purchase Price - Acquisition Costs (Stamp Duty/Reg) - Operating Expenses.

How does this property investment return calculator work?

This calculator computes total profit, net rental yield, cap rate, equity multiple, and annualized CAGR returns based on property price, rental income, expenses, and holding tenure.

Fermor is a financial platform for India. Every calculator is free to use, and a free account is available to save your results and access them later. Fermor is building an automated financial action system using the Account Aggregator framework to connect real accounts and close the gap between knowing what to do with your money and actually doing it.

Property Investment Return Calculator: Real Estate ROI & Cap Rate

Projected annual growth of property valuation and cumulative net rent collected over 10 years.
Year	Property Valuation	Net Cumulative Rent	Total Portfolio Value
Year 1	₹1,06,00,000	₹3,60,000	₹1,09,60,000
Year 2	₹1,12,36,000	₹7,20,000	₹1,19,56,000
Year 3	₹1,19,10,160	₹10,80,000	₹1,29,90,160
Year 4	₹1,26,24,770	₹14,40,000	₹1,40,64,770
Year 5	₹1,33,82,256	₹18,00,000	₹1,51,82,256
Year 6	₹1,41,85,191	₹21,60,000	₹1,63,45,191
Year 7	₹1,50,36,302	₹25,20,000	₹1,75,56,302
Year 8	₹1,59,38,480	₹28,80,000	₹1,88,18,480
Year 9	₹1,68,94,789	₹32,40,000	₹2,01,34,789
Year 10	₹1,79,08,476	₹36,00,000	₹2,15,08,476

Projected annual growth of property valuation and cumulative net rent collected over 10 years.

Year

Property Valuation

Net Cumulative Rent

Total Portfolio Value

Year 1

₹1,06,00,000

₹3,60,000

₹1,09,60,000

Year 2

₹1,12,36,000

₹7,20,000

₹1,19,56,000

Year 3

₹1,19,10,160

₹10,80,000

₹1,29,90,160

Year 4

₹1,26,24,770

₹14,40,000

₹1,40,64,770

Year 5

₹1,33,82,256

₹18,00,000

₹1,51,82,256

Year 6

₹1,41,85,191

₹21,60,000

₹1,63,45,191

Year 7

₹1,50,36,302

₹25,20,000

₹1,75,56,302

Year 8

₹1,59,38,480

₹28,80,000

₹1,88,18,480

Year 9

₹1,68,94,789

₹32,40,000

₹2,01,34,789

Year 10

₹1,79,08,476

₹36,00,000

₹2,15,08,476

What Is Property Investment Return?

Real estate investment return is the total financial yield generated by property ownership, combining ongoing rental cash flows (Net Operating Income) and long-term capital appreciation upon eventual property sale.

Unlike fixed deposits or stocks, real estate generates dual revenue streams: predictable monthly rental cash flow plus asset value growth driven by urban expansion and inflation.

To evaluate real estate accurately, savvy investors calculate Cap Rate, Net Rental Yield, Equity Multiple, and Annualized CAGR Return.

Real Estate Metrics and Formulas

The table below outlines key metrics used by institutional property investors in India:

Key real estate investment metrics and mathematical formulas.
Metric	Mathematical Formula	Target Benchmark (India)
1. Gross Rental Yield	(Gross Annual Rent / Property Price) × 100	2.5% - 4.5% (Residential)
2. Cap Rate (NOI Yield)	(Net Operating Income / Property Price) × 100	5.5% - 8.5% (Commercial)
3. Equity Multiple	Total Cash Collected / Initial Capital Invested	2.0x - 3.5x over 10 yrs
4. Annualized CAGR Return	((Total Final Value / Initial Outlay)^(1 / Years) - 1) × 100	10.0% - 14.0% Total CAGR

How to Use This Property Investment Return Calculator

Enter Purchase Price: Input property acquisition price and stamp duty % cost.
Enter Monthly Rent & Expenses: Input monthly rental income and annual property maintenance expenses.
Select Growth & Tenure: Set expected annual capital appreciation rate and holding period in years.
Review ROI & Cap Rate: View total net profit, cap rate, equity multiple, and year-by-year growth table.

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Frequently Asked Questions

Real estate ROI measures total financial gains earned from a property (net rental cashflow plus capital appreciation) expressed as a percentage of total initial capital invested.

Disclaimer: Property investment projections are based on user inputs and historical market growth trends. Real estate market prices and rental vacancy rates fluctuate based on local economic conditions. Consult a qualified financial advisor before executing high-value property transactions.