Rental Property Calculator
Free calculator to analyze rental property investments with cash flow, ROI, cash-on-cash return, and cap rate calculations
Rental Property Calculator
Results
What is a Rental Property Calculator?
A rental property calculator is a free investment analysis tool that evaluates rental property profitability. It calculates monthly cash flow, annual return on investment (ROI), cash-on-cash return, and capitalization rate (cap rate) to help investors make informed real estate decisions.
This calculator helps with:
- Investment analysis - Evaluate rental property profitability before purchase
- Cash flow planning - Determine monthly income after all expenses
- Return comparison - Compare different properties and investment opportunities
- Financing decisions - Analyze impact of down payment percentages on returns
- Performance tracking - Monitor existing rental property investment performance
For rent adjustment planning, use our rent increase calculator to determine new rental rates and income projections.
When managing partial month occupancy, the prorated rent calculator ensures fair tenant billing.
For agent fee analysis, our rental commission calculator determines costs of professional tenant placement.
How Rental Property Analysis Works
Rental property analysis uses key financial metrics:
Variables defined:
- Purchase Price: Total property acquisition cost
- Down Payment: Percentage of purchase price paid upfront
- Monthly Rent: Total rental income received monthly
- Monthly Expenses: All costs including mortgage, taxes, insurance, maintenance
Example: $250,000 purchase, 20% down ($50,000), $2,000 monthly rent, $1,500 monthly expenses. Monthly cash flow = $2,000 - $1,500 = $500. Annual cash flow = $6,000. Cash-on-cash return = ($6,000 ÷ $50,000) × 100 = 12%. Cap rate = (($24,000 - $18,000) ÷ $250,000) × 100 = 2.4%.
These metrics help investors evaluate whether a rental property meets their financial goals and risk tolerance, enabling data-driven investment decisions.
Key Concepts Explained
Cash Flow
Monthly income minus all expenses. Positive cash flow means profit; negative means out-of-pocket costs.
Cash-on-Cash Return
Annual return on actual cash invested. Best metric for leveraged investments with financing.
Cap Rate
Return if purchased cash with no financing. Useful for comparing properties across markets.
Net Operating Income
Total income minus operating expenses, excluding debt service. Key for cap rate calculations.
How to Use This Calculator
Enter Purchase Price
Input the property's purchase price or expected acquisition cost
Set Down Payment
Enter down payment percentage (typically 15-25% for investment properties)
Enter Monthly Rent
Input expected or actual monthly rental income from the property
Add Monthly Expenses
Include all costs: mortgage, taxes, insurance, maintenance, vacancies, management
Analyze Returns
Review cash flow, ROI, cash-on-cash return, and cap rate to evaluate profitability
Benefits of Using This Calculator
- • Investment Clarity: Understand true profitability before committing capital to property purchase.
- • Comparison Tool: Evaluate multiple properties side-by-side to find the best investment.
- • Risk Assessment: Identify negative cash flow situations before they become problems.
- • Financing Optimization: Determine optimal down payment for best returns on invested capital.
- • Goal Alignment: Ensure investment returns meet your financial objectives and timeline.
- • Performance Tracking: Monitor existing investments and identify improvement opportunities.
Factors That Affect Your Results
1. Location Quality
Prime locations have lower cap rates but stronger appreciation. Secondary markets offer higher cash flow.
2. Financing Terms
Interest rates and down payment significantly impact cash flow and returns. Lower rates improve profitability.
3. Vacancy Rates
Empty units mean no income but ongoing expenses. Factor 5-10% vacancy into expense calculations.
4. Maintenance Costs
Older properties require more upkeep. Budget 1-2% of property value annually for repairs and maintenance.
5. Property Management
Professional management costs 8-12% of rent but saves time and improves tenant quality and retention.
Frequently Asked Questions (FAQ)
Q: What is a good cash-on-cash return for rental property?
A: Typically 8-12% annually. Above 12% is excellent, 4-8% acceptable depending on market and risk level.
Q: How do you calculate rental property ROI?
A: (Annual Income - Annual Expenses) ÷ Total Investment × 100. Cash-on-cash divides by actual cash invested.
Q: What is a good cap rate for rental property?
A: Typically 4-10% depending on market. Higher rates (8-10%+) mean better returns but often higher risk.
Q: What expenses should I include in rental property calculations?
A: Mortgage, taxes, insurance, HOA, maintenance (1-2% of value), vacancy (5-10%), management (8-12%), utilities if paid.
Q: Is rental property a good investment?
A: Can be excellent for income and appreciation. Success depends on location, price, income, expenses, financing, and management.