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Rental Property Calculator
Analyze a rental property investment. Calculate cap rate, cash-on-cash return, NOI, and break-even rent. We're building this calculator now — check back soon.
Analyze a rental property investment. Calculate cap rate, cash-on-cash return, NOI, and break-even rent. We're building this calculator now — check back soon.
This calculator analyzes the financial performance of a rental property investment, computing key metrics that real estate investors use to evaluate deals: net operating income (NOI), cap rate, cash-on-cash return, gross rent multiplier (GRM), and projected cash flow after mortgage payments. Whether you're evaluating a single-family home, duplex, or small multifamily property, these metrics tell you whether a deal makes financial sense before you commit.
NOI = Gross Rental Income − Vacancy Loss − Operating Expenses
Cap Rate = NOI / Property Value × 100
Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested × 100
Operating expenses typically include property taxes, insurance, maintenance (estimate 1% of property value annually), property management (8–12% of rent), HOA fees, and reserves for capital expenditures. The mortgage payment is not included in NOI or cap rate calculations — these are financing-independent metrics.
The cap rate measures a property's return assuming you paid cash with no mortgage. A 6% cap rate means you earn 6% of the property's value as net operating income annually. In most US markets, residential rental properties trade at 4–8% cap rates. Higher cap rates generally mean higher risk markets or lower-quality properties; lower cap rates reflect more stable, high-demand markets.
Cash-on-cash measures the annual cash income generated on your actual cash invested (down payment + closing costs + immediate repairs). A 8% cash-on-cash return means your $50,000 invested generates $4,000/year in cash flow. This metric accounts for financing and is the more relevant number for leveraged investors.
A quick screening metric: monthly rent should equal at least 1% of purchase price. A $200,000 property should rent for at least $2,000/month. Properties that don't meet this threshold often struggle to cash flow after expenses. This is a rough filter, not a substitute for full analysis — markets with high appreciation potential often have lower rent ratios.
No property is 100% occupied year-round. Plan for 5–10% vacancy (3.6–4.8 weeks per year) in most markets, more in softer markets or higher turnover properties. Using 100% occupancy in your projections is the most common mistake new investors make.
It depends on location and risk tolerance. In primary markets (NYC, San Francisco, Boston), cap rates of 3–5% are common for high-quality properties with appreciation upside. In secondary and tertiary markets, 6–9% cap rates are typical. Anything above 10% warrants scrutiny — it likely reflects higher risk, deferred maintenance, or a challenged market.
There's no universal target, but many investors look for at least $200–$300/month per door in positive cash flow after all expenses and mortgage. This provides a buffer for unexpected repairs and vacancies. Properties in high-appreciation markets sometimes break even or run slightly negative on cash flow while still generating strong total returns through equity growth.
Rental property expenses deductible against rental income include: mortgage interest, property taxes, insurance, maintenance and repairs, property management fees, depreciation (27.5 years for residential), utilities paid by landlord, advertising, legal and accounting fees, and travel related to property management. Depreciation is particularly valuable — it's a non-cash deduction that often makes cash-flowing properties show a paper loss for tax purposes.
An LLC can provide liability protection separating your personal assets from the property. However, getting a mortgage in an LLC is harder and often more expensive (commercial loan terms vs. residential rates). Many investors start with properties in their personal name with umbrella insurance coverage, then transfer to an LLC later (though this can trigger a due-on-sale clause). Consult a real estate attorney and CPA for your specific situation.
The Mortgage Calculator helps determine your PITI on an investment property loan. The ROI Calculator provides a broader return analysis framework. The Capital Gains Tax Calculator models your tax liability when selling the property, including depreciation recapture.