Rental Property Calculator
A rental property calculator evaluates the investment potential of a property using key metrics: cap rate, cash-on-cash return, and monthly cash flow. These metrics help compare properties and determine whether a rental generates acceptable returns for the risk.
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Tip: The 50% rule: estimate operating expenses (excluding mortgage) at 50% of gross rent. If rent is $2,000/month, expect $1,000 in taxes, insurance, maintenance, vacancy, and management.
- 1Cap Rate = Net Operating Income (NOI) / Property Value × 100
- 2NOI = Annual rent − Operating expenses (taxes, insurance, maintenance, vacancy)
- 3Cash-on-Cash Return = Annual cash flow / Down payment × 100
- 4Cash flow = Rent − Mortgage − Operating expenses
$300k property, $2,000 rent, 7% mortgage, 20% down=Cap rate ~4.8%, cash flow varies by expensesTypical in moderate-cost markets
| Metric | Poor | Good | Excellent |
|---|---|---|---|
| Cap Rate | <4% | 5–7% | >8% |
| Cash-on-Cash Return | <4% | 6–10% | >12% |
| Gross Rent Multiplier | >20 | 12–16 | <10 |
| Monthly Cash Flow | Negative | $200–$500 | >$500 |
| Vacancy Rate assumption | 0% | 5–8% | — |
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Fun Fact
The 1% rule of thumb states that monthly rent should be at least 1% of purchase price. A $200,000 property should rent for $2,000/month. In expensive markets, achieving 1% is nearly impossible — cap rates compress.
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