Rental Property Calculator

What this rental property calculator does

This calculator models a single rental property for one year of steady-state operations. It converts purchase terms, rent, a vacancy allowance, and operating expenses into monthly and annual cash flow, net operating income, capitalization rate, cash-on-cash return, and return on total cash invested.

The point is to see whether the rent covers the property, not just the mortgage. A property can have a healthy mortgage payment and still lose money every month once taxes, insurance, maintenance, and vacancy are counted.

How to use this calculator

1. Enter the purchase price and closing costs.
2. Choose whether you are financing the purchase. If so, enter the down payment, interest rate, and loan term.
3. Enter the monthly rent, any other recurring income, a vacancy allowance, and a property management fee if you use one.
4. Enter the yearly operating expenses: property tax, insurance, HOA dues, maintenance, and any other costs.
5. Click Calculate.

The default example is a $200,000 property financed with 20% down at 6% over 30 years, rented for $2,000 per month with a 5% vacancy allowance. Cash flow is $382.39 per month, the cap rate is 8.05%, and the cash-on-cash return on the $40,000 down payment is 11.47%.

Rental property formulas

Down payment = Purchase price × Down payment %
Loan amount = Purchase price − Down payment
Monthly mortgage = Amortized payment on the loan amount
Vacancy loss = Monthly rent × Vacancy %
Operating expenses = (Property tax + Insurance + HOA + Maintenance + Other) / 12
                     + Monthly rent × Management fee %
Net operating income = Rent + Other income − Vacancy loss − Operating expenses
Monthly cash flow = Net operating income − Monthly mortgage
Cap rate = Annual net operating income / Purchase price
Cash-on-cash = Annual cash flow / Down payment
Return on invested cash = Annual cash flow / (Down payment + Closing costs)

What the results mean

• Monthly cash flow: the money left after the mortgage and all operating expenses. Negative cash flow means you fund the property from other income.
• Net operating income: cash flow before financing. It is the number used for cap rate, so two buyers with different loans get the same NOI.
• Cap rate: NOI divided by the purchase price. It compares properties without regard to how they are financed.
• Cash-on-cash return: annual cash flow divided by the cash you put in. It shows the yield on your own money, ignoring appreciation and loan principal.
• Return on total cash invested: annual cash flow divided by the down payment plus closing costs.

Assumptions and limitations

The calculator models one stable year: rent and expenses are held flat, and the property is bought and held. It does not model repairs before renting, rent or expense growth, appreciation, a future sale, refinancing, or a 1031 exchange. The tax treatment of rental income — depreciation, mortgage interest deductions, and passive loss limits — is excluded, so cash flow here is pre-tax cash flow. Property tax and insurance vary by jurisdiction and by property; use quotes, not national averages.

Frequently asked questions

What is a good cap rate?

It depends on the market and the risk. Lower cap rates usually mean a more expensive market with expectations of appreciation; higher cap rates often come with older properties or weaker locations. A cap rate is only comparable across similar properties in similar areas.

Why is cash-on-cash different from cap rate?

Cap rate ignores the loan. Cash-on-cash measures the return on the cash you actually invested, so leverage changes it. A property bought with 20% down can show a much higher cash-on-cash return than its cap rate when the mortgage rate is below the cap rate.

Should I include a management fee if I self-manage?

Only if you want to know what the property would cost to operate hands-off. Self-managers usually skip the fee, but the property is then paying you in labor rather than cash.

How much should I budget for vacancy and maintenance?

A common starting point is one month of vacancy per year (about 8%) and 1% of the property value per year for maintenance, but both vary enormously with the local market and the age of the building. Use local data when you have it.

Source

References:

• IRS Publication 527 — Residential Rental Property
• IRS Schedule E (Form 1040) — Supplemental Income and Loss

Disclaimer

This calculator is for informational purposes only. It is not investment, tax, or legal advice. Rental income, expenses, and tax treatment differ by property and jurisdiction. Verify the numbers with local listings, inspections, insurance quotes, and a qualified tax professional.