Rental Property Calculator

A rental property calculator turns a purchase price and monthly rent into the three metrics investors use to screen deals: monthly cash flow, cap rate, and cash-on-cash ROI. Buy a $250,000 property with 25% down at 7.4% over 30 years and rent it for $2,200/month, and you land near +$36/month cash flow, a 6.40% cap rate, and a 0.61% cash-on-cash return. These are the calculator's starting inputs; change any of them and all three numbers move.

The three core formulas

Each metric answers a different question. Cash flow asks "does it pay for itself?", cap rate asks "how good is the property?", and cash-on-cash asks "how good is my return?":

Here NOI (net operating income) is annual rent minus annual operating expenses, and it deliberately leaves out the mortgage. Operating expenses include property tax, insurance, maintenance, a vacancy reserve, property management, and HOA dues. Total cash invested is your down payment plus closing costs and any upfront rehab. If you only want the property-level yield in isolation, the dedicated Cap Rate Calculator isolates that single figure.

A worked example, line by line

Take the $250,000 property above renting for $2,200/month. With 25% down, the loan is $187,500; at 7.4% over 30 years the mortgage principal and interest is about $1,298/month. Operating expenses run roughly $866/month: about $229 property tax (1.1%/yr), $125 insurance ($1,500/yr), $176 maintenance (8% of rent), $110 vacancy (5%), $176 management (8%), and $50 HOA/other. Subtract everything from the $2,200 rent and you keep about $36/month, or $427/year. NOI is the annual rent ($26,400) minus annual operating expenses ($10,394), about $16,006, so the cap rate is 16,006 ÷ 250,000 = 6.40%. Your cash in is $62,500 down + $8,000 closing = $70,500, so cash-on-cash is 427 ÷ 70,500 = 0.61%.

The 7.4% rate is Freddie Mac's Primary Mortgage Market Survey average for 30-year fixed loans in the week of October 8, 2026. Loans for investment properties can be priced higher than that average for owner-occupied homes, so run the calculator with the rate you are actually quoted.

How to use this calculator

Enter the deal in order; the results update as you type:

1. Purchase price & monthly rent: the two numbers that drive everything. Use realistic, comparable rents, not the optimistic listing.
2. Down payment: entered as a percent; the calculator shows the dollar amount and computes your loan.
3. Interest rate & term: use the rate a lender quotes for this property; investment-property loans can cost more than loans on a home you live in.
4. Closing & upfront costs: lender fees, title, inspection and any initial rehab. These add to your cash invested and lower cash-on-cash return.
5. Operating expenses: open the panel to set property tax, insurance, and the maintenance, vacancy and management percentages, plus HOA or other monthly dues.

Read the headline monthly cash flow, then check the cap rate and cash-on-cash ROI cards, the mortgage constant, and the line-by-line monthly breakdown.

Who this calculator is for

• First-time investors screening listings to see which ones could actually cash flow.
• House hackers and BRRRR buyers checking returns after a down payment and rehab.
• Landlords deciding whether to keep, refinance, or sell an existing rental.
• Anyone comparing markets who wants cap rate and cash-on-cash side by side across cities.

Key terms explained

• Cash flow: what is left after every monthly cost, including the mortgage. The number that lands in (or leaves) your bank account.
• NOI (net operating income): annual rent minus operating expenses, before any mortgage. The foundation of cap rate.
• Cap rate: NOI ÷ price. A financing-neutral measure of the property's yield, used to compare deals.
• Cash-on-cash ROI: annual cash flow ÷ cash invested. Your personal return given your actual loan and down payment.
• Mortgage constant: a year of principal and interest ÷ the loan amount (8.31% for a 30-year loan at 7.4%). Borrowing raises cash-on-cash only when the cap rate is above it.
• Vacancy reserve: money set aside for months with no tenant; even great rentals are not occupied 100% of the time.
• Gross rent yield: annual rent ÷ price, before any expenses, a rough top-line comparison.

Scenario comparison: leverage changes your return

Cap rate describes the property and does not move with your loan, but cash-on-cash does. Using the same $250,000 / $2,200-rent deal at 7.4% with $8,000 closing costs, watch what the down payment does:

• 20% down ($50,000): about −$51/month cash flow, 6.40% cap rate, −1.05% cash-on-cash on $58,000 invested.
• 25% down ($62,500): about +$36/month cash flow, 6.40% cap rate, 0.61% cash-on-cash on $70,500 invested.
• 35% down ($87,500): about +$209/month cash flow, 6.40% cap rate, 2.62% cash-on-cash on $95,500 invested.

More money down means more monthly cash flow and, here, a higher cash-on-cash return. The reason is the mortgage constant: a year of payments on a 30-year loan at 7.4% costs 8.31% of the loan amount, more than the 6.40% the property earns, so every borrowed dollar costs more in payments than it brings in. When the cap rate is above the mortgage constant, the opposite happens and lower down payments boost cash-on-cash. Note that the constant, not the interest rate, is the hurdle for cash flow, because part of each payment repays principal; that principal still builds equity, which this cash-flow view does not count.

Two more scenarios: cheap vs. expensive markets

Markets behave very differently. A $180,000 home in a lower-cost area renting for $1,800 with 20% down and $5,400 (3%) of closing costs throws off about $85/month, a 7.21% cap rate and a 2.46% cash-on-cash return. A $500,000 property renting for only $2,800 with 25% down and $15,000 of closing costs loses about $1,018/month, with a 3.79% cap rate and a −8.72% cash-on-cash return: here you would be betting almost entirely on appreciation, not cash flow. Same calculator, opposite verdicts, which is exactly why running the numbers matters.

Rental property cash flow by purchase price and rent

The matrix below runs six deals through the exact formulas above. Each assumes 25% down, a 7.4% 30-year loan, closing costs of 3% of price, and the calculator's default operating budget (property tax 1.1%/yr, insurance $1,500/yr, maintenance 8%, vacancy 5%, management 8%, $50 HOA). Cap rate stays financing-neutral; cash flow and cash-on-cash swing with the rent-to-price ratio.

Notice the pattern: only the cheaper deals, with rent close to 1% of the price, cash flow at all, and only barely at a 7.4% rate, while pricier homes renting at well under 1% bleed cash every month. Higher rents relative to price lift both cap rate and cash flow together.

Quick screening rules: 1%, 2%, 50% and GRM

Investors often triage listings with back-of-the-envelope ratios before they open a full calculator. None of them replace the line-by-line numbers, but each one flags whether a deal is worth a closer look:

• The 1% rule: monthly rent should be at least 1% of the purchase price. A $250,000 home should rent for roughly $2,500. Whether listings clear this bar varies a lot from one market to the next, so it is a filter, not a verdict.
• The 2% rule: a far stricter version (rent at least 2% of price). A property that meets it deserves extra scrutiny for maintenance, turnover, and management costs, so treat it as a flag to investigate, not a green light.
• The 50% rule: a planning rule of thumb, not a measured average, that assumes operating expenses (everything except the mortgage) will eat about half of gross rent over the long run, once you average in vacancy, repairs, and the occasional big-ticket replacement. If half your rent covers operating costs and the other half must cover the mortgage with room to spare, the deal has a chance.
• Gross rent multiplier (GRM): price ÷ annual gross rent. A $250,000 home renting for $26,400/year has a GRM of about 9.5. Lower GRMs signal more rent per dollar of price; comparing GRMs across listings in the same market is a fast relative screen.

Use these to build a shortlist, then run each survivor through the full calculator. A deal that passes every rule of thumb can still lose money once a high property-tax bill or a steep insurance premium is layered in, and a deal that narrowly fails the 1% rule can still cash flow with a large enough down payment.

1% rule chart: target rent and returns by price

This quick-reference shows the 1% and 2% target rents for common price points, plus what a property renting at exactly 1% returns under the same default assumptions (25% down, 7.4% 30-year loan, 3% closing, default operating budget). At 1%, these deals cash flow and land around a 7% to 8% cap rate.

These figures assume you actually hit the 1% rent; the catch is that many expensive homes do not rent for 1% of their price, so the rule screens out more listings than it passes. Where a property does clear it, the default operating budget still leaves a cushion.

Financing vs. paying cash: how leverage reshapes the return

The single decision that most changes a rental's profile is how much you borrow. Paying all cash for the $250,000 example removes the $1,298 mortgage entirely, so monthly cash flow jumps to about $1,334 and the deal is solidly positive, and your $258,000 of cash (price plus closing) earns the cap-rate-level return of about 6.2% cash-on-cash. Financing the same property with 25% down ties up far less cash and lets you spread your capital across several doors, yet it introduces a fixed payment that does not pause when a tenant moves out.

The deciding factor for cash flow is the gap between the cap rate and the mortgage constant (a year of principal and interest divided by the loan amount). On a 30-year loan the constant is well above the interest rate: about 7.98% at 7% and 8.31% at 7.4%. When the cap rate sits above the constant, each borrowed dollar brings in more income than it costs in payments, so leverage lifts cash-on-cash above the all-cash return; this is positive leverage. When the constant is above the cap rate, as in this example, borrowing drags your cash-on-cash return down, even though you have less cash at stake. Total return is a different story, because the principal portion of each payment builds equity. Re-run the calculator at several down-payment levels and rates to see where the crossover lands for your deal, and weigh the higher headline return of leverage against the lower risk and steadier cash flow of paying cash.

Cash-on-cash return by down payment (step by step)

Here is a $300,000 property renting for $2,400 at a 7.4% 30-year loan with $9,000 closing costs and the default operating budget, worked at each down-payment level. Its 5.78% cap rate is far below the 8.31% mortgage constant, so this deal shows negative leverage: putting more cash down raises the cash-on-cash return until the all-cash figure approaches the cap rate.

For the table to reverse, so that smaller down payments produce the highest cash-on-cash, the mortgage constant would have to fall below the 5.78% cap rate. That takes more than a lower interest rate: even at 4%, the constant on a 30-year loan is 5.73%, barely below the cap rate, and closing costs in the denominator keep cash-on-cash below the all-cash figure. Borrow below the cap rate on a constant basis and leverage helps; borrow above it and it hurts.

Building a realistic operating-expense budget

Understated expenses are the number-one reason a "cash-flowing" rental quietly loses money, so it pays to budget each line deliberately rather than guessing a single round number:

• Property tax: often the largest fixed expense, and rates vary several-fold between states and counties. Taxes are often reassessed after a sale, so the seller's old tax bill can understate yours; check the local assessor's rules and verify the post-sale assessment.
• Insurance: a landlord (dwelling) policy usually costs more than an owner-occupied one, and premiums vary widely with location and risk. Get a real quote rather than copying a national average.
• Maintenance and repairs: usually budgeted as a percent of rent. Newer, recently renovated homes need less; older properties with original systems need more. The calculator's 8% is an example assumption.
• Vacancy reserve: even excellent rentals turn over, and each turnover means days or weeks of lost rent plus cleaning and make-ready costs. For scale, the Census Bureau's national rental vacancy rate was 7.3% in the second quarter of 2026; use local figures where you can.
• Property management: professional managers usually charge a percentage of collected rent, often plus a leasing fee. Even if you self-manage, budget for it: it values your time and keeps the analysis honest if you ever hand the property off.
• Capital expenditures (CapEx): the lumpy big-ticket items (roof, HVAC, water heater, flooring) that are not monthly but inevitable. Many investors reserve a separate amount per month so a $9,000 roof does not blow up a single year's return.
• HOA and other dues: condos and some single-family communities charge monthly HOA fees that come straight off your cash flow and can rise faster than rent.

When in doubt, be generous with expenses and conservative with rent. A deal that still cash flows under pessimistic assumptions is far safer than one that only works in a best-case spreadsheet.

Rental property taxes: depreciation, Schedule E and passive losses

The calculator shows pre-tax figures, but taxes can change a rental's real return considerably. The main federal rules, from IRS Publication 527 (2025):

• Depreciation: a residential rental building is depreciated over 27.5 years under the general MACRS system, straight-line with a mid-month convention. Land is never depreciable, so only the building's share of the price counts. Depreciation reduces taxable rental income even though it is not a cash cost.
• Where it is reported: rental income and expenses, including mortgage interest, property tax, insurance, repairs and depreciation, go on Schedule E (Form 1040).
• Passive loss limits: rental losses are generally passive, but if you actively participate (for example, you own at least 10% and approve tenants and set rents), you can deduct up to $25,000 of rental losses against other income. The allowance shrinks by 50% of your modified adjusted gross income above $100,000 and disappears at $150,000 ($12,500, $50,000 and $75,000 for married people filing separately who lived apart all year).

Depreciation can turn a property with a small positive cash flow into a tax loss on paper, which is part of why investors look beyond the cash-flow number. The rules have many details (recapture when you sell, what counts as a repair versus an improvement), so confirm your situation with a tax professional.

What this calculator deliberately leaves out

The headline figures here are pre-tax operating returns, which makes them a conservative floor. Real total return on a rental usually comes from four sources, and three of them are not shown:

• Cash flow (shown): the money left after every monthly cost. This is the only component the calculator reports, and the one most exposed to vacancy and expense surprises.
• Loan paydown (not shown): every mortgage payment retires a little principal, quietly building equity even when cash flow is thin. Over years this can add a meaningful return that never touches your bank account until you sell or refinance.
• Appreciation (not shown): if the property's value rises, your equity grows on the full asset value, not just your down payment. The leverage that amplifies appreciation is a major reason real estate builds wealth, but it is impossible to predict and can also work in reverse.
• Tax benefits (not shown): depreciation can shelter part of the rental income from tax, and mortgage interest and most operating expenses are deductible, as described above. These effects vary so much by investor that they belong in a conversation with an accountant, not a generic calculator.

Because three of the four return drivers are excluded, a property that merely breaks even on cash flow can still be a sound long-term investment once paydown, appreciation, and tax treatment are added, and a property with strong cash flow but no growth prospects can underperform a more balanced deal. Use the cash-flow number as your safety check, not as the whole story.

What moves the result the most

• Rent-to-price ratio: the single biggest driver of cap rate and cash flow. The 1% rule is a quick screen.
• Interest rate: on a 30-year loan, each 1% of rate noticeably shifts the mortgage payment and your cash flow.
• Operating-expense assumptions: understating maintenance, vacancy and management is the classic way a "good" deal turns negative.
• Down payment: changes cash invested and cash flow, moving cash-on-cash up or down depending on the cap rate versus the mortgage constant.
• Property tax: rates differ several-fold by state and county, and it is a major expense line.

Tips for analyzing a rental

• Be conservative on rent and generous on expenses. The downside surprises in real estate almost always come from optimistic assumptions.
• Separate CapEx from maintenance. A roof or furnace is a periodic, lumpy cost; reserve for it on top of routine repairs.
• Verify the tax bill, not the listing estimate. Taxes are often reassessed after a sale.
• Stress-test it. Re-run with one extra vacant month or a half-point higher rate to see if the deal still survives.

Limitations and assumptions

This is a planning estimate, not a guarantee or an offer:

• It models a fixed-rate loan and does not include mortgage insurance, balloon terms or ARM adjustments.
• It shows pre-tax cash flow; it does not model depreciation, the deductibility of mortgage interest, or other tax effects.
• It excludes appreciation and loan paydown, which can be a large part of total long-term return.
• Expenses are treated as level, but rents, taxes, insurance and repairs all tend to rise over time.
• It does not separately reserve for capital expenditures unless you fold them into the maintenance percentage.

How it compares to related calculators

This page answers "is this rental a good deal right now?" For other questions, a sister tool fits better:

• To isolate just the property's yield, use the Cap Rate Calculator; to decide between owning and renting a home for yourself, use the Rent vs. Buy Calculator.
• To estimate the mortgage on the financing side, use the Mortgage Calculator, and to verify the local tax line, use the Property Tax Calculator.
• To estimate the depreciation deduction, use the Depreciation Calculator.
• To measure the annual return on a full holding period, including a sale, use the IRR Calculator.
• For general portfolio growth with contributions, use the Investment Calculator.
• To compute a simple or annualized return on any investment, use the ROI Calculator or the CAGR Calculator.
• To plan long-term and check if you are on track to retire, use the Retirement Calculator.

Rental property is only one route to building wealth. To weigh it against tax-advantaged retirement accounts, use the Retirement Calculator for your overall plan, the 401(k) Calculator for employer-plan growth, and the Roth IRA Calculator or Traditional IRA Calculator to compare tax-free versus tax-deferred contributions. Real estate concentrates cash in one leveraged asset, while those accounts can spread it across the market with no tenants to manage.

Sources

• Internal Revenue Service (IRS): Publication 527 (2025), Residential Rental Property (rental income and expenses, 27.5-year depreciation, Schedule E, the $25,000 special allowance and its phaseout).
• Internal Revenue Service (IRS): Publication 946, How To Depreciate Property.
• Freddie Mac: Primary Mortgage Market Survey (30-year fixed average of 7.40% for the week of October 8, 2026).
• U.S. Census Bureau: Housing Vacancies and Homeownership, second quarter 2026 (national rental vacancy rate 7.3%, released July 28, 2026).
• Federal Reserve: H.15 Selected Interest Rates (10-year Treasury yield of 5.22% on October 8, 2026).