Rental Property Calculator
Calculate cash flow, cap rate, and return on investment.
Property Information
Investment Analysis
About This Calculator
The Rental Property Calculator helps you analyze the financial performance of a rental property investment. This calculator determines cash flow, cap rate, and cash-on-cash return to help you evaluate whether a rental property is a good investment.
Key metrics include monthly and annual cash flow (rental income minus expenses), cap rate (net operating income divided by purchase price), and cash-on-cash return (annual cash flow divided by down payment). These metrics help compare different investment opportunities.
Formula & Calculation Method
Rental Property Calculation:
Monthly Mortgage = [P × R × (1+R)^N] / [(1+R)^N - 1]
Effective Rent = Monthly Rent × (1 - Vacancy Rate)
Total Expenses = Monthly Mortgage + Operating Expenses
Monthly Cash Flow = Effective Rent - Total Expenses
Annual Cash Flow = Monthly Cash Flow × 12
NOI = (Effective Rent - Operating Expenses) × 12
Cap Rate = (NOI ÷ Purchase Price) × 100
Cash-on-Cash Return = (Annual Cash Flow ÷ Down Payment) × 100
Cap rate measures the property's return based on purchase price, while cash-on-cash return measures return based on your actual cash investment (down payment). Higher values indicate better investment potential.
How to Use This Calculator
- Enter Purchase Price: Input the total purchase price of the rental property.
- Enter Down Payment: Input the down payment amount.
- Enter Loan Details: Input interest rate and loan term.
- Enter Rental Income: Input expected monthly rent.
- Enter Vacancy Rate: Input expected vacancy percentage (typically 5-10%).
- Enter Operating Expenses: Input monthly expenses (insurance, maintenance, property management, etc.).
- View Results: See cash flow, cap rate, and cash-on-cash return metrics.
Frequently Asked Questions
What is a good cap rate for rental property?
Cap rates vary by location and property type. Generally, 4-10% is considered reasonable, with higher rates indicating better returns but potentially higher risk. Compare cap rates to similar properties in the area.
What is cash-on-cash return?
Cash-on-cash return measures the annual cash flow relative to your initial cash investment (down payment). It shows how quickly your investment generates returns. Higher values indicate better investment performance.
What expenses should I include?
Include property taxes, insurance, maintenance, repairs, property management fees, HOA fees, utilities (if paid by owner), and any other recurring monthly expenses. Don't include mortgage principal and interest (already calculated separately).
What is a good cash flow?
Positive cash flow is essential for rental property investments. Many investors aim for $100-200+ per unit per month in cash flow. However, some properties may have negative cash flow but strong appreciation potential.
Expert Reviewed
This calculator was reviewed by NumCalculators Editorial Team, Multi-disciplinary Expert Team