Rental Property Calculator

Cash-on-cash return is your annual cash flow divided by the cash you actually invested — the down payment plus closing costs. Many rental investors look for 8% or more, though acceptable figures vary by market: in expensive coastal cities investors may accept less and rely on appreciation, while cash-flow-focused investors in lower-cost markets target 10% or higher. The key is that cash-on-cash measures the return on YOUR money, not the property's full price, so leverage from a mortgage can lift it considerably.

Cap rate — capitalization rate — is the property's net operating income divided by its purchase price, expressed as a percentage. It deliberately ignores the mortgage, so it shows the return as if you bought the property in cash. Cash-on-cash return, by contrast, includes the mortgage and measures the return on the cash you put down. Cap rate is useful for comparing properties on an equal footing regardless of financing; cash-on-cash tells you what your specific deal, with your specific loan, actually yields.

Net operating income is the annual rent a property collects, reduced by a vacancy allowance, minus its annual operating expenses — property tax, insurance, maintenance, property management and HOA fees. Critically, NOI excludes the mortgage payment, because the mortgage is a financing cost, not an operating cost. NOI is the foundation of rental analysis: cap rate is NOI ÷ price, and cash flow is NOI minus the mortgage.

Include everything it costs to operate the property, not just the obvious items: property tax, landlord insurance, repairs and maintenance, property-management fees (often 8–10% of rent even if you self-manage and want a realistic figure), HOA dues, and any utilities you pay. You should also budget a vacancy allowance — a percentage of gross rent set aside for the months the unit sits empty between tenants. New investors often underestimate maintenance and vacancy, which turns a paper-positive deal into a money-loser.

Negative cash flow means the rent doesn't cover the mortgage, operating expenses and vacancy allowance combined — you'd pay the shortfall out of pocket each month. Common causes are too small a down payment (a large loan means large payments), a high purchase price relative to market rents, or a high interest rate. A negative-cash-flow property can still work if you expect strong appreciation, but it carries more risk: you are subsidising it every month and betting on the resale value.

The 1% rule is a quick screen: a rental property's monthly rent should be at least 1% of its purchase price. A $300,000 property should rent for about $3,000 a month to pass. It is not a precise verdict — it ignores expenses, financing and location — but it is the fastest way to filter listings, because a property well below 1% will usually struggle to cash-flow. This calculator shows the ratio for your numbers and flags whether it clears the 1% threshold. In high-price, high-appreciation markets many good investments fall below 1%, so treat it as a screen, not a rule.

Professional property management typically costs 8% to 12% of the gross monthly rent, sometimes with extra fees for placing a new tenant. Even if you plan to self-manage, many investors still budget for management — your time has value, and you may not always want to handle it yourself. This calculator has a dedicated property-management field, separate from other expenses, because management is the single most commonly forgotten cost and leaving it out makes a deal look better than it is. Set it to 0% only if you are certain you will self-manage indefinitely.

Total return combines three things: the cash flow you collect, the mortgage principal your tenants pay down, and the property's appreciation. Cash-on-cash return alone often looks modest — 4% to 8% — but once appreciation and paydown are added, the annualized total return on a leveraged rental can reach the low double digits in a healthy market. This calculator's long-term view projects all three over a horizon you choose and reports an annualized total return, so you can compare a rental against other investments like the stock market on a like-for-like basis.

Yes — the long-term view does. The main results focus on the year-one operating numbers (cash flow, cap rate, cash-on-cash return), because a deal should stand on its operating merits before you count on price growth. But the long-term view then projects the property forward over a horizon you set: it appreciates at the rate you choose, the mortgage is paid down, cash flow accumulates, and the calculator reports the equity built and an annualized total return. That gives you both the disciplined Year-1 picture and the fuller multi-year one.