Rental Property Calculator

This calculator answers one question, which is whether a rental property earns enough to justify its price. Enter the purchase price, down payment, closing costs, loan rate and term, monthly rent, a vacancy allowance and your monthly operating expenses.

It follows the order lenders use. Income comes first, then operating expenses, then the mortgage. That order produces monthly cash flow, net operating income, the cap rate, your cash on cash return and the DSCR that lenders check before they approve a loan.

Effective rent = monthly rent x (1 - vacancy rate). The vacancy rate is a share of rent, because empty months are the income you never collect.

Net operating income, or NOI, = (effective rent - operating expenses) x 12. Operating expenses mean taxes, insurance, HOA dues, maintenance, management and utilities. The mortgage is not an operating expense, so it never appears in NOI.

Cap rate = NOI / purchase price x 100. Monthly cash flow = effective rent - operating expenses - mortgage payment. Cash on cash return = annual cash flow / (down payment + closing costs) x 100. DSCR = NOI / annual debt service.

The monthly mortgage payment uses the standard amortization formula M = P x r(1+r)^n / ((1+r)^n - 1), where P is the loan amount, r is the monthly rate (annual rate / 12) and n is the number of payments (years x 12). This matches the mortgage calculator, which you can use to check the loan on its own.

Take a $200,000 property with 20% down ($40,000), $10,000 of closing costs, a 7% loan over 30 years, $1,800 of monthly rent, no vacancy allowance and $550 of monthly operating expenses. The loan is $200,000 - $40,000 = $160,000, and the amortization formula gives a monthly payment of $1,064.48.

NOI = ($1,800 - $550) x 12 = $15,000. Monthly cash flow = $1,800 - $550 - $1,064.48 = $185.52, or $2,226.19 a year. Cap rate = $15,000 / $200,000 x 100 = 7.50%. Cash invested = $40,000 + $10,000 = $50,000, so cash on cash = $2,226.19 / $50,000 x 100 = 4.45%. DSCR = $15,000 / $12,773.76 = 1.17. The amortization calculator shows how that $1,064.48 payment splits between principal and interest each month.

1. Enter the purchase price and your down payment in dollars or as a percentage.
2. Add closing costs, the annual interest rate and the loan term, or choose Cash purchase for no loan.
3. Enter the monthly rent, a vacancy allowance and your monthly operating expenses without the mortgage.
4. Press Calculate to see the cash flow, NOI, cap rate, cash on cash return and DSCR with every step shown.

Cap rate measures the property and cash on cash measures your cash, so the same deal can tell two different stories. Run the worked example with no loan and the cap rate stays exactly 7.50% while the return on your cash changes completely.

Use the cap rate to compare properties against each other, because it ignores your financing entirely. Use cash on cash to judge whether the deal rewards the actual dollars you put in, and use DSCR to check whether the rent can carry the loan.

This tool models year one only. It does not add appreciation, rent growth, loan principal paydown, income taxes, depreciation or selling costs. All of those can move the true return in either direction.

It also assumes the rent and expenses you enter stay fixed. Maintenance and vacancy allowances are starting points, not guarantees, so re-run the numbers with conservative figures before you make an offer. If you are still deciding between renting and buying a home, the rent vs buy calculator compares those two paths directly.