Rental Property Calculator

Using the calculator is straightforward. You'll enter information about the property's purchase price, financing details, expected rental income, and operating expenses. The calculator then generates your key return metrics automatically.

Here's what to have on hand before you start:

• Purchase price and estimated closing costs
• Down payment amount and loan terms (interest rate, loan length)
• Monthly rent you expect to collect
• Monthly operating expenses (insurance, taxes, maintenance, property management, utilities if applicable)
• Vacancy rate estimate (a common starting point is 5–10%)

Once you've entered those figures, the calculator outputs your monthly cash flow, annual net operating income, cap rate, cash-on-cash return, and total ROI. Each metric tells you something different, so it's worth understanding what each one actually means.

Every rental property has two sides to its financial story: what comes in and what goes out. Getting both sides right is the only way to get an accurate picture of profitability.

Income sources typically include:

• Monthly rent from tenants
• Pet fees, parking fees, or laundry income (if applicable)
• Late fees (though these shouldn't be counted on regularly)

Common operating expenses include:

• Property taxes
• Homeowner's or landlord insurance
• Maintenance and repairs (many investors budget 1% of property value per year)
• Property management fees (usually 8–12% of monthly rent)
• Vacancy losses (estimated months per year with no rent coming in)
• HOA fees, if applicable
• Utilities paid by the landlord

Notice that mortgage principal and interest are not operating expenses. They're financing costs. That distinction matters when you calculate NOI and cap rate, which we'll cover next.

Cash flow is the simplest gut-check metric: how much money is left after every bill is paid each month. Positive cash flow means the property puts money in your pocket. Negative cash flow means you're covering the shortfall out of pocket every month.

The formula is:

Monthly Cash Flow = Gross Rental Income – Vacancy Loss – Operating Expenses – Mortgage Payment

For example, say a property brings in $2,000/month in rent. You estimate 5% vacancy ($100), operating expenses run $600/month, and your mortgage payment is $950/month. Your monthly cash flow would be:

$2,000 – $100 – $600 – $950 = $350/month

That's $4,200 per year in your pocket. Not life-changing on its own, but combined with appreciation and equity paydown, it adds up. A common rule of thumb is to target at least $100–$200 per door per month in cash flow, though markets vary widely.

The capitalization rate, or cap rate, measures a property's income potential independent of how it's financed. Because it ignores your mortgage, it's the go-to metric for comparing properties on an apples-to-apples basis.

Cap Rate = Net Operating Income (NOI) ÷ Property Value × 100

NOI is your gross rental income minus vacancy and operating expenses, but before mortgage payments. Using the earlier example: $2,000/month rent, minus $100 vacancy, minus $600 expenses equals $1,300/month NOI, or $15,600 annually.

If the property is worth $200,000:

$15,600 ÷ $200,000 = 7.8% cap rate

What's a good cap rate? It depends on the market. In expensive coastal cities, cap rates of 3–5% are common because appreciation expectations are higher. In Midwest or Sun Belt markets, investors often target 6–10%. Higher cap rates mean more income relative to value, but they can also signal higher risk or lower-demand areas. Use cap rate as a comparison tool, not a standalone verdict.

Cash-on-cash return answers a specific question: how much cash am I making relative to the cash I actually invested? Unlike cap rate, it does account for your financing, making it a more personal metric tied to your specific deal structure.

Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100

Total cash invested includes your down payment, closing costs, and any upfront rehab or repair costs. If you put $50,000 into a deal (down payment plus closing costs) and the property generates $4,200/year in cash flow:

$4,200 ÷ $50,000 = 8.4% cash-on-cash return

Many investors use 8–12% as a benchmark for a solid cash-on-cash return, though expectations vary. The big advantage of this metric is that it reflects your actual leverage situation. A property with a great cap rate can still have a poor cash-on-cash return if financing costs eat up most of the income.

Return on investment for a rental property is broader than cash-on-cash return. It tries to capture the full picture of what you're earning, including cash flow, mortgage paydown (equity buildup), and sometimes appreciation.

Total Annual Return = Cash Flow + Principal Paydown + Appreciation (if estimating)

ROI = Total Annual Return ÷ Total Cash Invested × 100

Using the same example: $4,200 cash flow, plus let's say $1,800 in annual principal paydown from your mortgage, equals $6,000 in total return. If you invested $50,000:

$6,000 ÷ $50,000 = 12% ROI

Some investors add projected appreciation to this calculation, but that's speculative. Sticking to cash flow and equity paydown keeps your ROI estimate grounded in what's actually happening, not what you hope will happen.

Your mortgage is usually the single biggest expense on a rental property, and the terms you lock in have a huge effect on profitability. A difference of even half a percentage point in your interest rate can change your monthly cash flow by $50–$100 on a typical loan.

A few things to think through:

• Loan type matters. Conventional investment property loans typically require 15–25% down and carry slightly higher rates than primary residence loans.
• Interest rate vs. cash flow. Higher rates mean higher monthly payments, which squeeze cash flow directly. If rates are high, you may need to negotiate a lower purchase price to make the numbers work.
• Loan term. A 15-year mortgage builds equity faster and costs less total interest, but the higher payment reduces monthly cash flow. A 30-year loan improves cash flow but costs more over time.
• Refinancing potential. If you buy when rates are high and refinance later, your cash flow can improve significantly without changing anything else about the property.

Run the calculator with multiple financing scenarios before committing. Small changes in rate or term can flip a marginal deal into a solid one, or reveal that a deal only pencils out under optimistic assumptions.

No single number answers this question. A good investment depends on your goals, your market, your financing, and what else you could do with the same money. That said, here's a practical framework for evaluating what the calculator tells you.

Beyond the numbers, ask yourself a few practical questions. Is the area growing or declining? Is the property in a condition that won't require a major capital expense in the next few years? Can you handle a few months of vacancy without financial stress?

The calculator gives you clarity on the math. Your job is to pair those numbers with real-world judgment about the property, the neighborhood, and your own financial situation. If the numbers work and the fundamentals are sound, you've probably got a deal worth pursuing.