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Rental Property Calculator

Enter the purchase price, loan, rent and yearly costs. You get the monthly cash flow, the cap rate, the cash-on-cash return and the debt service coverage ratio.

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Result

Estimate for information only, not professional advice. Last reviewed .

How we calculate it

Rent collected is the monthly rent × 12 × (1 − vacancy). Net operating income (NOI) is that rent minus the property tax, insurance, maintenance and other costs, before the mortgage. The cap rate is NOI ÷ price. Cash flow is the NOI minus the yearly mortgage payments. Cash-on-cash return is the yearly cash flow ÷ the cash you put in (the down payment plus the closing costs). The debt service coverage ratio is NOI ÷ the yearly mortgage payments.

For example, a 300,000 property with 25% down at 7% for 30 years has a mortgage payment of 1,496.93. With 2,500 rent and the default costs, NOI is 20,220, the cap rate is 6.74%, the cash flow is 188.07 a month, the cash-on-cash return is 2.79% and the coverage ratio is 1.13.

Assumptions and limits

  • This is an estimate. Rent, vacancy, repairs and rates change, and the figures depend on what you enter. It does not include income tax, depreciation or the growth in the property value.
  • The mortgage payment is principal and interest only. It is not counted as an operating cost in the NOI, as is usual for the cap rate.
  • The rent-to-price ratio is the monthly rent as a percentage of the price. Some investors use 1% as a rough first screen, but it ignores the costs.

Frequently asked questions

What is a good cap rate?

There is no single number. A higher cap rate means more income for the price, but it often comes with more risk or a weaker location. Compare properties in the same market, and check the assumptions behind the NOI.

What is cash-on-cash return?

It is the yearly cash flow after the mortgage divided by the cash you actually invested. It shows the return on your own money, so it depends on how much you borrowed.

What does a debt service coverage ratio of 1.13 mean?

The property earns 1.13 times what is needed to pay the mortgage. Lenders often want a ratio comfortably above 1. Below 1 the income does not cover the loan payments.

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Worked example (a fixed example using the starting numbers, it does not change as you type)

Inputs: Purchase price = 300000; Down payment (% of the price) = 25; Mortgage interest rate (%) = 7; Loan term (years) = 30; Monthly rent = 2500; Vacancy (% of the year empty) = 5; Property tax per year = 3600; Insurance per year = 1200; Maintenance and repairs (% of rent collected) = 8; Other costs per month (management, HOA, utilities) = 100; Closing costs and initial repairs = 6000.

  • Monthly cash flow $188.07
  • Annual cash flow $2,256.83
  • Net operating income (yearly) $20,220.00
  • Cap rate 6.74%
  • Cash-on-cash return 2.79%
  • Monthly mortgage payment $1,496.93
  • Cash invested $81,000.00
  • Debt service coverage ratio 1.13
  • Rent-to-price ratio 0.83%

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Last reviewed: . Formulas and assumptions are described on our methodology page. For information only; not professional advice.