Rental Property Calculator (Cash Flow & Cap Rate)
Enter the purchase price, loan terms, and expected rent to see whether a rental pencils out: monthly cash flow, NOI, cap rate, and cash-on-cash return. A five-year projection shows how modest rent growth changes the picture.
What you'd pay for the property
Investment loans often require 20-25% down
Rates on rentals typically run above primary-home rates
Check comparable listings, not hopes
Rent set aside for empty months and turnover
Taxes, insurance, repairs, management, reserves
For the five-year projection below
Monthly cash flow
$62
rent minus vacancy, expenses, and the $1,138 loan payment
NOI (annual)
$14,400
net operating income, before the loan
Cap rate
6.0%
NOI ÷ purchase price, ignores financing
Cash-on-cash return
1.2%
annual cash flow ÷ your $60,000 down payment
Five-year projection at 3% rent growth
| Year | Monthly rent | Annual NOI | Annual cash flow |
|---|---|---|---|
| 1 | $2,000 | $14,400 | $747 |
| 2 | $2,060 | $14,832 | $1,179 |
| 3 | $2,122 | $15,277 | $1,624 |
| 4 | $2,185 | $15,735 | $2,083 |
| 5 | $2,251 | $16,207 | $2,555 |
Assumes expenses stay proportional to rent, the vacancy allowance holds steady, and a fixed-rate loan, so the payment never moves. Appreciation and principal paydown are not included.
How the four numbers are calculated
Net operating income (NOI) is what the property earns before the loan: monthly rent, minus a vacancy allowance, minus operating expenses, times twelve. Cap rate divides NOI by the purchase price, which is the yield you'd earn buying in cash. Monthly cash flow then subtracts the mortgage payment from NOI, and cash-on-cash return divides a year of that cash flow by the cash you invested. This calculator uses the down payment as the cash invested; in real life, add closing costs and any upfront repairs to that denominator, which pushes the return down further.
A worked example at today's rates
Take a $240,000 single-family home with 25% down ($60,000) and a 6.5%, 30-year loan on the remaining $180,000, which costs about $1,138 a month. Rent is $2,000: a 5% vacancy allowance sets aside $100 and 35% operating expenses claim $700, leaving $1,200 of monthly NOI. That's $14,400 a year, a clean 6.0% cap rate. But after the loan payment, cash flow is roughly $62 a month, about $747 a year, a 1.2% cash-on-cash return. The lesson: a respectable cap rate can still be a skinny deal once financing sits on top of it. The loan does keep building equity as it amortizes, but you can't spend equity when the water heater dies, and one $200 surprise per month flips this property negative.
The 1% rule is folklore, not law
The old screen says a property should rent for 1% of its price each month: $2,400 on our $240,000 example, versus the $2,000 it actually gets (0.83%). The rule was coined when prices and rates were lower, and holding today's deals to it would reject almost everything in most metros. Use it the way it was meant: as a ten-second triage that decides which listings earn the full worksheet above. Then stress-test the survivors by nudging the vacancy and expense sliders upward before you trust the result.
When to run these numbers
Before making an offer, obviously, but also before converting a former home into a rental and at every lease renewal, since rents and expenses drift. Compare the cash-on-cash figure against what the same $60,000 could earn in boring, liquid alternatives, and model the loan itself with the mortgage calculator. If you do buy, the property and its loan belong in your net worth picture from day one: our guide to tracking everything you own covers how real estate fits in.
Frequently asked questions
What is a good cap rate for a rental property?
It depends on the market and the risk. Lower cap rates (3-5%) usually mean expensive, stable neighborhoods; higher ones (8% and up) usually price in more risk, older housing stock, or slower growth. Rather than chasing one magic number, compare a property's cap rate against similar buildings nearby and against what your cash could earn elsewhere.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores your loan: it divides net operating income by the purchase price, which makes properties comparable no matter how they're financed. Cash-on-cash includes the loan: it divides your actual annual cash flow, after the mortgage payment, by the cash you put in. Cap rate rates the property; cash-on-cash rates your deal.
What counts as operating expenses?
Property taxes, insurance, repairs and maintenance, property management, HOA dues, landscaping, pest control, and reserves for big-ticket items like roofs and water heaters. The mortgage payment is not an operating expense. Many landlords estimate 35-45% of rent for older properties and somewhat less for newer ones.
Is the 1% rule still realistic?
The 1% rule says monthly rent should be at least 1% of the purchase price. It dates from an era of lower prices and lower rates, and in most large U.S. metros today few properties clear it. Treat it as a quick screen that tells you which deals deserve a full analysis, not as a pass-fail verdict.
Does this calculator include appreciation and principal paydown?
No. It measures cash flow, the part of the return you can actually spend. Appreciation and the equity you build as the loan amortizes are real, but they're less predictable and can't cover a negative month. Many investors model them separately once a property clears the cash flow test.
Does this calculator save my numbers?
No. Everything runs in your browser and nothing you type is stored or sent anywhere.
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