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Rental Property Calculator

Analyze a rental property investment. Calculate monthly cash flow, cash-on-cash return, cap rate, and gross rent multiplier using real expenses.

Calculation Inputs

Results computed instantly — your data never leaves your device.

Live Results

Real-Time

Monthly Cash Flow

-$436.18

Cash-on-Cash Return

-6.50%

Cap Rate

4.89%

Gross Rent Multiplier

11.7×

Net Operating Income

$17,120/yr

Monthly Mortgage (P&I)

$1,862.85

Total Cash Invested

$80,500

Total Annual Expenses

$33,734.16

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Annual Income & Expense Breakdown

Gross Rent
$30,000
Vacancy Loss
−$1,500
Eff. Gross Income
$28,500
Mortgage
−$22,354.16
Property Tax
−$4,200
Insurance
−$1,400
Maintenance
−$3,500
Management
−$2,280

How to Use the Rental Property Calculator

  1. 1

    Enter the purchase price, down payment, interest rate, and loan term.

  2. 2

    Enter the expected monthly rent and set the vacancy rate (5–10% is typical).

  3. 3

    Add annual property tax rate, insurance, maintenance (1% of value is standard), and property management fee.

  4. 4

    Enter closing costs (2–3% is typical). All key metrics update instantly.

Formula & Mathematical Basis

NOI = Effective Gross Income − Operating Expenses Effective Gross Income = Gross Rent × (1 − Vacancy%) Cash Flow = NOI − Annual Mortgage Payment Cash-on-Cash Return = Annual Cash Flow ÷ Total Cash Invested Cap Rate = NOI ÷ Purchase Price GRM = Purchase Price ÷ Annual Gross Rent

Variable Key

NOI

Net Operating Income — income after all operating expenses but before mortgage debt service

CoC

Cash-on-Cash Return — annual cash flow ÷ total cash invested (down payment + closing costs)

Cap Rate

NOI ÷ Purchase Price — unlevered return, independent of financing

GRM

Gross Rent Multiplier — purchase price ÷ annual gross rent; lower is better

Vacancy%

Expected percentage of time the property sits unoccupied or rent is uncollected

📝 Cap rate does not include mortgage payments — it reflects the unlevered yield on the asset. Cash-on-cash return reflects levered yield (uses debt). A positive cash flow does not guarantee a profitable investment; appreciation, equity paydown, and tax benefits must also be considered.

Step-by-Step Examples

1

Single-family rental — Midwest market

Scenario: $250,000 purchase, $50,000 down (20%), 7% rate, 30-yr term, $1,800/mo rent, 5% vacancy, 1.2% tax, $1,200 insurance, 1% maintenance, 8% management, 3% closing.

  1. 1.Loan: $200,000. Monthly P&I ≈ $1,331. Annual mortgage = $15,972.
  2. 2.Gross rent: $1,800 × 12 = $21,600. Vacancy loss (5%): $1,080. EGI: $20,520.
  3. 3.Operating expenses: Tax $3,000 + Insurance $1,200 + Maintenance $2,500 + Management $1,642 = $8,342.
  4. 4.NOI = $20,520 − $8,342 = $12,178. Cap rate = $12,178 ÷ $250,000 = 4.87%.
  5. 5.Cash flow = $12,178 − $15,972 = −$3,794/yr. Monthly: −$316.
  6. 6.Total cash invested = $50,000 + $7,500 closing = $57,500. CoC = −6.6%.
✅ Negative cash flow of −$316/mo. Cap rate: 4.87%. This deal requires appreciation to be profitable.
2

Cash-flowing duplex — Sun Belt market

Scenario: $350,000 duplex, $70,000 down, 7% rate, $2,800/mo combined rent, 5% vacancy, 1.3% tax, $1,600 insurance, 1% maint, 0% management (self-managed), 3% closing.

  1. 1.Loan: $280,000. Monthly P&I ≈ $1,863. Annual mortgage = $22,356.
  2. 2.EGI = $2,800 × 12 × 0.95 = $31,920.
  3. 3.Operating expenses: Tax $4,550 + Insurance $1,600 + Maintenance $3,500 = $9,650.
  4. 4.NOI = $31,920 − $9,650 = $22,270. Cap rate = 6.36%.
  5. 5.Cash flow = $22,270 − $22,356 = −$86/yr ≈ break-even.
  6. 6.CoC ≈ −0.1% (essentially zero). Equity paydown + appreciation = total return.
✅ Break-even cash flow. Cap rate: 6.36%. Strong equity-build play in appreciating market.

Practical Use Cases

  • Screening rental properties before making an offer
  • Comparing multiple investment properties side-by-side on cap rate and CoC
  • Determining the maximum purchase price for a target CoC return
  • Building a landlord cash-flow model to present to private lenders
  • Evaluating the impact of raising rents on investment returns
  • Stress-testing assumptions: what happens if vacancy rises to 10%?

Common Mistakes to Avoid

  • Using gross rent without deducting vacancy — even 5% vacancy materially changes CoC.
  • Omitting property management fees when self-managing — your time has a cost.
  • Using purchase price as property value for tax calculations — always use current assessed/market value.
  • Ignoring capital expenditure reserves (CapEx): roof, HVAC, appliances can cost $5,000–$20,000 unexpectedly.
  • Assuming appreciation compensates for negative cash flow — appreciation is speculative; cash flow is contractual.
  • Forgetting that NOI and cap rate are pre-financing metrics — using them post-mortgage is incorrect.

Glossary of Terms

Net Operating Income (NOI)
Annual rental income minus all operating expenses (taxes, insurance, maintenance, management), before mortgage payments.
Cap Rate
NOI ÷ purchase price. The unlevered yield of a property, used to compare investments independently of how they are financed.
Cash-on-Cash Return
Annual pre-tax cash flow ÷ total cash invested. Measures the levered return on the actual money you put in.
Gross Rent Multiplier (GRM)
Purchase price ÷ annual gross rent. A quick screening ratio — lower values indicate more income per dollar of purchase price.
Debt Service Coverage Ratio (DSCR)
NOI ÷ Annual Mortgage Payment. Lenders require DSCR ≥ 1.25 for most investment property loans. Below 1.0 means the property cannot service its own debt.
Capital Expenditure (CapEx)
Large, irregular expenses for major repairs or replacements (roof, HVAC, plumbing). Budget 0.5–1.5% of property value annually as a CapEx reserve.

Frequently Asked Questions

What is cash-on-cash return?

▾
Cash-on-cash return (CoC) measures the annual pre-tax cash flow divided by the total cash invested (down payment + closing costs). A CoC of 6–10% is generally considered good for a single-family rental.

What is cap rate?

▾
Cap rate (capitalization rate) = Net Operating Income ÷ Purchase Price. It measures a property's return independent of financing. A cap rate of 5–10% is typical in most US markets. Use it to compare properties without the noise of different financing structures.

What is gross rent multiplier (GRM)?

▾
GRM = Purchase Price ÷ Annual Gross Rent. A lower GRM indicates better value. Most residential markets fall between 8–15×. Divide 1 by the GRM to get a rough yield before expenses.

What vacancy rate should I use?

▾
A 5% vacancy rate is a common default for long-term rentals in stable markets. Use 8–10% for higher-turnover areas or short-term rentals. Never assume 100% occupancy — even great properties have gap periods.

Should I include property management fees even if I self-manage?

▾
Yes. Including an 8–10% management fee even if you self-manage captures the true economic cost — your time has value, and you may need management later. It also makes your underwriting more conservative and defensible.

Sources & References

  1. [1]
    Rental Housing Finance Survey— U.S. Census Bureau, 2023
  2. [2]
  3. [3]
    Real Estate Investing Fundamentals— National Association of Realtors, 2023

CalculatorFree Real Estate Finance TeamReal Estate Investment & Property Management Review

Formulas verified against NAR investment property guidelines and Fannie Mae DSCR underwriting standards.

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