How to use the Rental Property Calculator
- 1 Enter the price, down payment and mortgage rate.
- 2 Enter the monthly rent and a vacancy rate.
- 3 Enter yearly property tax and insurance, and monthly HOA.
- 4 Enter maintenance and management as a share of rent and read the results.
Worked example
A $300,000 rental with 25% down at 7%, renting for $2,400 with 5% vacancy. Rent after vacancy is $2,280. Expenses are about $809 and the mortgage $1,497, leaving cash flow of about −$26 a month. The cap rate is 5.88%, but rent is only 0.8% of the price, so this deal needs a lower price or higher rent.
Features
Cash flow
Rent after vacancy minus expenses and the mortgage.
Cap rate and NOI
Net operating income divided by price.
Cash-on-cash
Yearly cash flow divided by cash invested, including 3% closing costs.
1% rule check
Monthly rent as a share of price.
When to use it
Comparing deals
Rank properties by cap rate and cash flow.
Offer price
See the price that makes the numbers work.
Financing
Compare 20% and 25% down.
Existing rentals
Review how your property performs.
Frequently asked questions
What is a good cap rate?
Many investors look for 5% to 8%, depending on the market. Lower cap rates are common in expensive, high-growth cities.
What is cash-on-cash return?
Yearly pre-tax cash flow divided by the cash you put in, such as the down payment and closing costs.
What is the 1% rule?
A quick screen: monthly rent should be at least 1% of the purchase price.
What expenses should I include?
Property tax, insurance, HOA fees, repairs, capital expenses, property management, vacancy, utilities you pay and accounting.
Is negative cash flow always bad?
Not always, if appreciation and loan paydown are strong, but it carries more risk.
How are rentals taxed?
Rental income is taxable, but expenses, mortgage interest and depreciation over 27.5 years are deductible.
What down payment do investment loans need?
Usually 15% to 25% for a conventional investment property loan.
What is NOI?
Net operating income: rental income minus operating expenses, before mortgage payments and income tax.
Should I hire a property manager?
Managers usually charge 8% to 12% of rent. They save time but reduce cash flow.
How much should I budget for repairs?
Many investors set aside 5% to 10% of rent for maintenance and more for older homes.
What is the 50% rule?
A quick estimate that operating expenses, excluding the mortgage, will be about half of the rent.
What is the difference between cap rate and cash-on-cash?
Cap rate ignores financing and compares properties on price, while cash-on-cash shows the return on your own money after the mortgage.
Should I include closing costs?
Yes. The calculator assumes 3% of the price, but check your real quote, which may include loan fees, title insurance and inspections.
How do rising rates affect rentals?
Higher mortgage rates raise payments and lower cash flow, so many investors put more money down or look for higher-rent areas.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated