Rental Property Calculator
Calculate cap rate, cash-on-cash return, and monthly net operating income (NOI) for real estate investments.
Taxes, insurance, repairs, management and a vacancy allowance — not the mortgage.
Down payment plus closing and repair costs.
Investment Performance
The numbers a listing will not show you
Rental returns are quoted in several ways and they are not interchangeable. Gross yield is annual rent over purchase price and is close to meaningless, because it ignores every cost. Net yield subtracts operating expenses. Cap rate is net operating income over value and is how the market actually compares properties. Cash-on-cash return divides annual pre-tax cash flow by the cash you actually put in, which is the figure that answers what your money is doing.
Two costs sink more amateur projections than any other. Vacancy — budget 5-8% of gross rent even in a strong market, because tenants leave and units sit. And capital expenditure, which is not the same as maintenance: roofs, boilers and kitchens have finite lives and predictable replacement costs, so reserving monthly for them turns a future disaster into a line item. A projection showing rent minus mortgage as profit is not a projection.
The 1% rule — monthly rent of at least 1% of purchase price — survives as a quick screen rather than an analysis, and in most expensive markets nothing clears it any more. Leverage cuts both ways too: a mortgage amplifies returns when values rise and amplifies losses when they fall, while the payment stays fixed through a vacancy.
Frequently asked questions
What is capitalization rate (Cap Rate)?
Cap rate is calculated as Net Operating Income (NOI) divided by current property market value or purchase price.
What is the 1% rule?
A screening heuristic that monthly rent should be at least 1% of the purchase price. It is a filter for finding candidates quickly, not an analysis - it ignores taxes, insurance, vacancy, maintenance and financing, and in many high-cost markets almost nothing clears it.
How do I calculate cash-on-cash return?
Annual pre-tax cash flow divided by total cash invested - down payment plus closing costs plus rehab. It measures the return on the money you actually put in, which is why leverage raises it, and why it must be read alongside the risk that leverage adds.
What is a cap rate?
Net operating income divided by property value. NOI excludes financing, so cap rate describes the property rather than the deal, which makes it the standard way to compare assets. Lower cap rates mean higher prices relative to income - usually reflecting lower perceived risk or higher expected growth.