Rental Property Calculator
Analyse a rental for cash flow, cap rate, cash-on-cash return and total IRR.
About Rental Property Calculator
Rental property analysis starts with Net Operating Income (NOI): gross rent minus vacancy losses and all operating expenses — but before mortgage payments, depreciation, or income taxes. NOI is a property-level metric; the same property has the same NOI regardless of how it's financed. Cap rate (NOI / purchase price) lets you compare properties without financing noise. Cash-on-cash return adds financing back: it measures the annual after-debt cash flow relative to your actual cash outlay. DSCR (NOI / debt service) is the lender's metric — most banks require ≥ 1.25. Total IRR models your full equity return including eventual sale proceeds, giving a single annualized number that captures both income and appreciation.
Formulas
NOI
NOI = Effective Gross Income − Operating Expenses (no debt, no capex)
- EGI
- Effective Gross Income (rent after vacancy)
- OpEx
- Property tax + insurance + maintenance + management
Cap Rate
Cap Rate = NOI / Purchase Price × 100
- P
- Purchase price
Cash-on-Cash
Cash-on-Cash = Annual After-Debt Cash Flow / Total Cash Invested × 100
- ATCF
- After-Tax Cash Flow (NOI − debt service)
DSCR
DSCR = NOI / Annual Mortgage Payments
Worked example
With the default values below, Rental Property Calculator returns Annual Cash Flow of -$3,887. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Purchase Priceminimum 0 $
- 300,000 $
- Down Payment %accepts 0–100 %
- 20 %
- Closing Costsminimum 0 $
- 5,000 $
- Rehab / Renovation Costsminimum 0 $
- 0 $
- Mortgage Rateaccepts 0–30 %
- 7 %
- Loan Term (years)accepts 1–40
- 30
- Monthly Gross Rentminimum 0 $
- 2,200 $
- Vacancy Rate %accepts 0–100 %
- 5 %
- Annual Property Taxminimum 0 $
- 3,600 $
- Annual Insuranceminimum 0 $
- 1,200 $
- Maintenance (% of property value/yr)accepts 0–20 %
- 1 %
- Property Management Fee %accepts 0–30 %
- 8 %
- Other Annual Expensesminimum 0 $
- 0 $
- Holding Period (years)accepts 1–50
- 10
- Annual Appreciation Rate %accepts 0–20 %
- 3 %
- Selling Costs % of Sale Priceaccepts 0–20 %
- 6 %
Results
- Annual Cash FlowAfter all expenses and mortgage payments.
- -$3,887
- Monthly Cash Flow
- -$324
- Cap RateNOI ÷ Purchase price. Independent of financing.
- 5.09%
- Cash-on-Cash ReturnAnnual cash flow ÷ total cash invested.
- -5.98%
- Total IRR (with sale)Annualized return including cash flow and appreciation over hold period.
- 6.40%
- Net Operating Income
- $15,274
- Debt Service Coverage RatioLenders typically require ≥ 1.25. Below 1.0 = cash flow is negative.
- 0.80
- Monthly Mortgage Payment
- $1,596.73
- Gross Rent MultiplierPurchase price ÷ annual gross rent. Lower is better.
- 11.4
- Total Cash Invested
- $65,000
Step by step
- 1Total cash invested= $65,000
- 2Effective gross income= $25,080
- 3Net Operating Income (NOI)= $15,274Does NOT include mortgage payments — NOI is property-level, not investor-level.
- 4Annual debt service= $19,161
- 5Annual cash flow= -$3,887
- 6Cap rate= 5.09%
- 7Cash-on-cash return= -5.98%
Assumptions and limits
- The result is derived only from the 16 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
What is a good cap rate?
Cap rates vary enormously by market and property type. In major urban markets, 4–5% cap rates are common for stabilised multifamily. Secondary markets might see 6–8%. Higher cap rates imply more risk or lower growth expectations. A 'good' cap rate depends on your alternatives and risk tolerance, not an absolute number.
Why is NOI different from cash flow?
NOI excludes debt service (mortgage payments), income taxes, and capital expenditures. It measures the property's intrinsic earning power. Cash flow is what actually lands in your bank account after paying the mortgage. Two investors can buy the same property, get identical NOIs, and have vastly different cash flows due to different financing structures.
What is DSCR and why do lenders care?
Debt Service Coverage Ratio = NOI / annual mortgage payment. It measures whether the property generates enough income to cover its loan payments. A DSCR of 1.0 means income exactly covers debt; below 1.0 means you're subsidising the property from other income. Most commercial lenders require DSCR ≥ 1.25, meaning NOI is 25% more than required for debt payments.
What appreciation rate should I use for IRR?
US residential real estate has averaged roughly 3–4% annual appreciation nationally, but this masks huge geographic variation. Use local market data if you have it. The 3% default is roughly in line with long-run inflation. Note that even flat appreciation (0%) can still produce acceptable returns if cash flow is strong.