Rental Property Calculator
Model every expense and yield metric for long-term buy-and-hold investments before you buy.
Free to start. No spreadsheets.
Visual Walkthrough
Three metrics — NOI, Cap Rate, and Cash-on-Cash — each answer a different investment question. You need all three:
Step 1 — Calculate NOI (ignores debt)
Step 2 — Cap Rate (property value independent of financing)
Step 3 — Cash-on-Cash (your actual return after mortgage)
The 50% Rule — Quick Expense Filter
50% rule = fast pass/fail filter. Run full calculator before buying.
Cap Rate Benchmarks — National Market Tiers
Primary Market
3–5%
NYC, LA, SF — appreciation play
Secondary Market
6–9%
Charlotte, Indy, Columbus
Tertiary / Rural
8–12%
Cash flow focused
Rental Yield Formulas — The Three Numbers Every Landlord Needs
Rental property underwriting uses three distinct yield metrics, each answering a different investment question. Understanding all three prevents costly mistakes in property selection and financing.
Worked Example: Indianapolis, IN — 3/2 SFR
Purchase: $185,000 with 25% down ($46,250 + $3,700 closing = $49,950 cash in)
Market rent: $1,650/mo · Mortgage (7%, 30yr): $926/mo
Monthly Expenses
Vacancy (5%): $82
Management (9%): $149
Maintenance (5%): $82
CapEx (5%): $82
Taxes + Insurance: $290
Total expenses: $685
Returns
Monthly NOI: $965
Monthly Cash Flow: $39
Annual Cash Flow: $468
Cap Rate: 6.3%
CoC Return: 0.9%
Note: Thin CoC — equity build + appreciation carry this deal
Pro Tip: In today's rate environment (6-7.5% mortgages), many traditionally cash-flowing markets barely break even on CoC. Investors accept this only if appreciation + equity paydown + depreciation tax benefits create a compelling total return. Model all four return components — not just monthly cash flow.
Rental Investment Fundamentals
What the Rental Calculator Does
Calculates the full yield picture of any residential rental investment. Inputs gross rent and models all operating expenses (vacancy, management, maintenance, CapEx, taxes, insurance), then subtracts mortgage debt service to produce monthly net cash flow, annual Cap Rate, and Cash-on-Cash Return — the three numbers every landlord must know.
Why Full Expense Modeling Matters
Rookie landlords look at: rent minus mortgage = profit. Experienced landlords know that vacancy, management, maintenance, property taxes, insurance, and CapEx reserves consume 40-55% of gross rent before the mortgage is even paid. The difference between a good rental deal and a money pit is found in honest expense modeling, not optimistic projections.
Rental Underwriting Process
Verify Local Market Rents
Check Rentometer, Zillow Rentals, and local property management company data to find the true market rent for comparable units — not what the current landlord is charging.
Model All Operating Expenses
Budget every expense category: vacancy (5%), management (8-10%), maintenance (5%), CapEx (5%), taxes (post-reassessment rate), and insurance. Total should approach 40-50% of gross rent.
Overlay Financing and Calculate Yield
Subtract your monthly mortgage P&I payment from NOI to get net cash flow. Divide annual cash flow by total cash invested for Cash-on-Cash return.
Most investors lose money here — avoid these mistakes:
- Forgetting CapEx reserves — a 15-year-old HVAC or aging roof will need replacement during your hold; budget for it monthly, not as a surprise.
- Using current property tax as an expense line — in most states, taxes reassess to your purchase price, often increasing 30-60% on year one.
- Assuming you'll self-manage for free — always value self-management at market rate (8-10% of gross rent) to see the true deal economics.
Example Scenario
Interactive Rental Projections
Real-World Application
How experienced landlords analyze deals before buying:
- ✓Use the 50% rule as a first-pass filter: if 50% of gross rent doesn't cover all expenses (excluding mortgage), dig deeper before pursuing the deal.
- ✓Model post-purchase property tax using county reassessment data — the seller's current tax bill is often irrelevant after you take title.
- ✓Never assume 100% occupancy. Use 92-95% as your baseline — even well-managed properties have 2-4 weeks of vacancy annually.
- ✓Check local rent growth data before buying. A market with flat or declining rents changes the long-term investment thesis significantly.
- ✓Calculate your debt service coverage ratio (DSCR = NOI ÷ Annual Debt Service). Lenders require ≥1.25; aim for ≥1.35 as a personal target.
Rental Property Analysis — Investor Questions Answered
Q.How much cash flow should I target per rental property?
Most investors target $100-$300/month in net cash flow per door (after mortgage, expenses, and reserves) as a minimum threshold. On a portfolio of 10 properties at $200/door, that's $2,000/month in passive cash flow. However, in high-appreciation markets, experienced investors sometimes accept $0-$50/month cash flow in exchange for strong equity growth. Never accept negative cash flow unless you have very specific data on appreciation trajectory.
Q.What's the biggest expense new landlords underestimate?
CapEx reserves — the capital set aside for major system replacements. A 15-year-old HVAC costs $6,000-$10,000 to replace. A roof on a 1,400 sqft house costs $8,000-$16,000. A water heater is $1,200-$2,500. If you don't reserve 5% of gross rent for CapEx, you'll fund these replacements from personal income — turning your 'passive' investment into an expense. Budget CapEx as a monthly reserve, not a one-time surprise.
Q.Should Cap Rate or Cash-on-Cash return matter more to me as an investor?
It depends on your goal. If you're comparing properties across different financing structures or markets, Cap Rate is the objective benchmark. If you're evaluating whether this specific deal with this specific mortgage makes sense for your portfolio, Cash-on-Cash is the number that matters. Experienced investors track both: Cap Rate tells them if they got a good deal; CoC tells them if their financing strategy is working.
Q.How do I account for property tax increases after purchase?
In many states, property taxes reset to the new purchase price when title transfers. A house assessed at $120,000 that you buy for $200,000 may see taxes jump 40-60% upon purchase. Research your county's reassessment policy before buying. In California (Prop 13), taxes are capped at purchase price plus 2%/year. In Texas or Florida, reassessments can be significant. Use the post-purchase assessed value for your expense modeling, not the seller's current tax bill.
Q.What's the difference between gross rent, effective gross income, and NOI?
Gross Rent = total potential rent if 100% occupied. Effective Gross Income (EGI) = Gross Rent minus vacancy allowance (typically 5-10%). Net Operating Income (NOI) = EGI minus all operating expenses (management, taxes, insurance, maintenance, CapEx) before mortgage payments. NOI is the property's income independent of financing. Cap Rate = NOI ÷ Purchase Price. Cash flow = NOI minus debt service (mortgage P&I).
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