Rental Property Calculator: Analyze Cash Flow and Returns
The rental property calculator above shows whether a single-family rental is a smart investment. Enter the purchase price, rent, loan terms, and expenses to see cash flow, cap rate, cash-on-cash return, and long-term ROI in seconds. It works for first-time buyers and seasoned landlords alike. The detailed guides below break down each metric so you can read your results with confidence.
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How it works
A rental property calculator estimates your profit by subtracting all costs from your rental income. It starts with effective gross income, which is your annual rent minus a vacancy allowance. Then it subtracts operating expenses like taxes, insurance, maintenance, and management to find net operating income (NOI). Finally, it subtracts your mortgage payment to reveal your cash flow.
Four numbers tell the story. NOI is income after operating costs but before the loan. Cap rate is NOI divided by purchase price, a quick way to compare deals. Cash flow is the cash left each month after the mortgage. Cash-on-cash return is annual cash flow divided by the cash you invested.
Frequently asked questions
How does a rental property calculator work?
A rental property calculator subtracts your vacancy loss, operating expenses, and mortgage payment from your rental income. Take this example: a $350,000 home with 25% down rents for $2,800 a month. After a 5% vacancy allowance, taxes, insurance, maintenance, and management, the net operating income is $20,844 a year. The mortgage of $1,746 a month leaves cash flow near break-even, about -$9 a month.
Is a break-even rental property still a good investment?
Yes, a near break-even property can still earn a strong return. In the example above, monthly cash flow is roughly -$9, yet the 20-year annualized return (IRR) is 9.45%. Two forces drive this: the property appreciates over time, and each mortgage payment builds your equity. Cash flow is only part of the picture, so judge a deal on total return, not just monthly profit.
What is a good cap rate and cash-on-cash return?
Cap rate and cash-on-cash return depend on your market, but here is what the example shows. The cap rate is 5.96%, found by dividing the $20,844 NOI by the $350,000 price. The cash-on-cash return is -0.12%, the annual cash flow of about -$113 divided by the $98,000 invested. Use the cap rate calculator and cash-on-cash return calculator to test your own numbers.
What does DSCR mean for a rental property?
DSCR (debt service coverage ratio) measures whether rent covers the mortgage. It divides net operating income by your annual loan payment. In the example, the DSCR is 0.99, just under 1.0. A DSCR below 1 means the property's income does not fully cover the loan payment, so you must add cash to make up the gap. Many lenders want a DSCR of 1.2 or higher.
What is the 1% rule in rental investing?
The 1% rule says monthly rent should equal at least 1% of the purchase price. In the example, $2,800 in rent on a $350,000 home is 0.80%, below the threshold. The rule is a fast screen, not a verdict. It ignores taxes, financing, and appreciation, so always run the full numbers in the rental cash flow calculator before deciding.
How is rental income taxed?
Rental income is taxable, but many costs are deductible. The IRS requires you to report all rent you receive, including advance rent and certain tenant payments. You can deduct operating expenses like mortgage interest, property taxes, insurance, repairs, and management fees. You also depreciate the building over 27.5 years. See IRS Topic No. 414 and Publication 527 for the full rules.