Rental Property Calculator
See the monthly cash flow, cap rate and cash-on-cash return of a rental property. Enter the price, loan, rent and costs, and the results update as you type.
The numbers below are an example. Replace them with your own.
How to use the calculator
- Enter the purchase price, your down payment and the loan terms from your lender's quote.
- Add the closing costs and any repairs you need to do before renting it out.
- Enter the rent you expect and a vacancy allowance.
- Add the yearly costs of running the property. Costs shown as a percent are taken from the rent you actually collect.
- Read the results. Try changing the rent or the interest rate to see how sensitive the deal is.
What the results mean
| Result | What it tells you |
|---|---|
| Net operating income (NOI) | Income left after vacancy and running costs, before the mortgage and income tax. |
| Cap rate | NOI divided by the purchase price, as a percent. It compares properties regardless of financing. |
| Cash flow | NOI minus mortgage payments. What is left in your pocket each year, before tax. |
| Cash-on-cash return | Annual cash flow divided by the cash you put in: down payment, closing costs and upfront repairs. |
| Debt service coverage ratio | NOI divided by the year's mortgage payments. Above 1 means the property covers its loan payments, and lenders set their own minimums. |
| Break-even occupancy | The share of the year the property must be rented for cash flow to reach zero. |
| Monthly rent as % of price | The figure behind the 1 percent rule of thumb. |
| Gross rent multiplier | Purchase price divided by yearly rent. A lower number means more rent for the price. |
How the calculation works
- Loan = price × (1 − down payment percent).
- Monthly payment = loan × r ÷ (1 − (1 + r)−n), where r is the monthly rate and n the number of monthly payments.
- Collected income = (rent + other income) × 12, less vacancy.
- NOI = collected income − tax − insurance − HOA − other costs − management, maintenance and reserves.
- Cap rate = NOI ÷ price.
- Cash flow = NOI − 12 × monthly payment.
- Cash-on-cash = cash flow ÷ (down payment + closing costs + repairs).
Worked example
A $300,000 property with 25 percent down, a 6.5 percent 30-year loan, $9,000 closing costs, $2,400 monthly rent, 5 percent vacancy, $3,600 property tax, $1,200 insurance, and management, maintenance and reserves of 8, 5 and 5 percent. These are example figures, not a forecast.
- Loan: $225,000. Monthly payment: $1,422.
- Collected income: $27,360 a year after vacancy.
- NOI: $17,635. Cap rate: 5.88%.
- Mortgage payments: $17,066 a year. Cash flow: $569 a year, or $47 a month.
- Cash invested: $84,000. Cash-on-cash return: 0.68%.
- Debt service coverage ratio: 1.03. Break-even occupancy: 92.6%.
This deal barely covers its costs, so small changes matter. With rent $200 a month higher, annual cash flow moves from $569 to $2,439 and cash-on-cash return from 0.68% to 2.90%. Try the same change in the calculator.
What this calculator leaves out
It models year one before income tax. It does not include appreciation, the principal you pay down each month, tax effects such as depreciation, rent growth, or selling costs. Use it to screen properties, then build a fuller model for any you are serious about.
Questions
What is a good cap rate?
There is no single answer. Cap rates differ by city, property type and interest rates, and a higher cap rate usually comes with more risk or a weaker location. Compare a property against similar ones in the same area instead of against a fixed number.
Why does the cap rate ignore the mortgage?
Cap rate measures what the property earns on its own, so it can be compared across properties however they are financed. The mortgage is accounted for in cash flow, cash-on-cash return and the debt service coverage ratio.
What counts as net operating income?
Rent and other income, less vacancy and the costs of running the property: tax, insurance, management, maintenance, reserves and any HOA or other running costs. It leaves out the mortgage payment, income tax and depreciation.
What is the 1 percent rule?
A rough screen that says monthly rent should be at least 1 percent of the purchase price. It is quick, but it is only a first filter. Many higher-priced areas fail it while still working on the full numbers, and some properties pass it and still lose money. The calculator shows your figure under monthly rent as a percent of price.
What vacancy and maintenance should I use?
Use figures from your own market and property. The example uses 5 percent vacancy, 5 percent maintenance and 5 percent for capital reserves purely to show how the maths works. Ask local property managers, and look at what comparable rentals take to fill.
What does the calculator leave out?
It looks at year one before income tax. It does not include appreciation, the principal you pay down on the loan, tax benefits, changes in rent over time, or the costs of selling. It is a screening tool, not a full investment model.
Is this financial advice?
No. It is a calculator that applies standard formulas to the figures you enter. Check the numbers with a lender, accountant or other qualified adviser before you buy.