Rental Property Calculator

• Runs a proper operating statement rather than subtracting the mortgage from the rent.
• Treats vacancy, maintenance and capital reserves as percentages of rent, which is how they behave over a holding period.
• Reports cap rate, cash-on-cash return and DSCR separately, and explains what each one excludes.
• Adds principal paid down and assumed appreciation to show first-year total return alongside cash flow.

How to use this calculator

Start with the purchase price, the down payment, the financing and the rent. Add the fixed annual costs you already know: property tax and insurance are usually available from the listing or the county.

The advanced fields are where the honesty lives. Vacancy, management, maintenance and capital reserves are the four items that separate a spreadsheet from a real property. The defaults here are deliberately not optimistic. If you intend to self-manage, you can set management to zero — but do it knowingly, because it is a commitment for the whole holding period rather than a saving.

Read the results in this order: cash flow first, because it is what has to work every month; then cash-on-cash, because it is the return on your actual money; then cap rate, because it describes the building rather than your deal.

How the numbers are built

Effective gross income = (rent + other income) × 12 − vacancy
Operating expenses     = tax + insurance + HOA + utilities + management
                         + maintenance + capital reserves + other
Net operating income   = effective gross income − operating expenses

Cap rate       = NOI ÷ purchase price
Cash flow      = NOI − annual debt service
Cash-on-cash   = annual cash flow ÷ total cash invested
DSCR           = NOI ÷ annual debt service

Note what net operating income deliberately excludes: the mortgage. That is what makes cap rate a property measure rather than a deal measure, and it is why two buyers paying the same price for the same building always share a cap rate and rarely share a cash-on-cash return.

Total cash invested is the down payment plus closing costs plus any up-front rehabilitation — not just the down payment, which is the usual shortcut and the usual reason a quoted cash-on-cash return looks better than it is.

A worked example

A $320,000 duplex with 25% down at 7.25% over 30 years, renting for $2,400 a month, with $3,600 of property tax and $1,600 of insurance.

Gross scheduled income is $28,800. A 6% vacancy allowance takes it to $27,072. Management at 8%, maintenance at 8% and capital reserves at 6% add about $6,200 on top of the $5,200 of tax and insurance, giving roughly $11,400 of operating expenses and a net operating income of $15,674 — a 4.9% cap rate.

The mortgage on $240,000 costs about $1,637 a month, or $19,647 a year. That is more than the NOI, so the property runs at a monthly loss of about $331 and a DSCR of 0.80 — below what most investment-property lenders will write. The first-year total return is still positive once principal paydown and appreciation are counted, but that is a different claim from "it pays for itself".

Cap rate, cash-on-cash and DSCR are not the same question

Cap rate asks what the property earns relative to its price, ignoring how it is financed. It is the right measure for comparing two buildings, and the wrong one for comparing two deals.

Cash-on-cash return asks what your money earns. It includes the mortgage, so it moves with the down payment, the rate and the term. Leverage raises it when the property earns more than the debt costs and destroys it when it does not.

DSCR asks whether the property covers its own debt. Lenders writing investment-property loans commonly want 1.20 to 1.25 or better, and it is the number most likely to determine whether the deal can be financed at all.

The 1% rule — monthly rent of at least 1% of the purchase price — is a screening shortcut from a period of much lower interest rates. It is useful for deciding what to look at, not for deciding what to buy.

Assumptions and limitations

• First year only. Rent growth, expense inflation and rising property taxes are not projected.
• No tax modelling. Depreciation alone often turns a small positive pre-tax cash flow into a taxable loss, and depreciation recapture reverses part of that on sale.
• Reserves are averages. A roof does not fail annually. Capital expenditure is smooth here and lumpy in reality, which matters for how much cash you need on hand rather than for the long-run average.
• Appreciation is an assumption, not a forecast. It is used only in the total-return figure and never in cash flow.
• No exit modelling. Selling costs, capital gains and depreciation recapture are not included.

Common mistakes

Leaving out capital reserves. Roofs, HVAC systems and water heaters are certainties with uncertain dates. A projection without them will always look better than the property performs.

Counting only the down payment as the investment. Closing costs and rehabilitation are real money and belong in the denominator of cash-on-cash.

Assuming full occupancy. Turnover costs more than the empty weeks — cleaning, repairs, listing and screening all cluster at the same moment.

Reading a negative cash flow as a failed deal, or a positive one as a good one. Both can be rational; what matters is whether the decision was made with the whole picture in view.

Frequently asked questions