️ Rental Property
🆓 Free
Cap Rate + ROI
️ Rental Income Calculator
Enter property price, monthly rent, and all expenses to instantly calculate monthly cash flow, cap rate, cash-on-cash return, NOI, and overall ROI - with a full income and expense breakdown. Includes vacancy, CapEx reserve, property management, and mortgage. Get a clear investment verdict against real benchmarks.
️ Rental Property Analyser
Purchase Details
Monthly Rental Income
Monthly Operating Expenses
Appreciation & Tax
️ Disclaimer: Projections for informational purposes. Past performance does not guarantee future results. Consult a financial advisor.
Investment Metrics Explained
Run the calculator first to see your personalised metrics with benchmark comparisons.
Run the calculator first.
Benchmark Targets
| Metric | Poor | Good | Great |
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Rental Investment Metrics
Net Operating Income (NOI)
NOI = Gross Rental Income
- Vacancy Loss
- Operating Expenses
(NOT including mortgage payments)
Operating Expenses include:
Property tax, Insurance, Management fee,
Maintenance, HOA, Utilities, CapEx reserve
NOI is used to calculate Cap Rate and compare
properties regardless of financing.
Cap Rate (Capitalisation Rate)
Cap Rate = (Annual NOI / Purchase Price) x 100
Example: NOI $18,000 / Purchase $350,000 = 5.14%
A higher cap rate = higher return (but often more risk)
Used to compare properties without financing.
Good benchmark: 5-8% for most residential markets.
Cash-on-Cash Return (CoC)
CoC = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100
Annual Cash Flow = Annual NOI - Annual Mortgage Payments
Total Cash Invested = Down Payment + Closing + Rehab
Example:
Annual Cash Flow: $3,600
Cash Invested: $100,000
CoC = 3,600 / 100,000 = 3.6%
CoC measures return on YOUR actual cash invested.
Gross Rent Multiplier (GRM)
GRM = Purchase Price / Annual Gross Rent
Example: $350,000 / ($2,400 x 12) = 12.15
Lower GRM = better deal.
Quick screening tool - does not account for expenses.
Rule of thumb: GRM under 10 is excellent.
The 1% Rule
Monthly rent should be at least 1% of purchase price.
Example: $350,000 property needs $3,500/month rent.
This rule is hard to meet in expensive markets but is
a quick initial screening tool. If a property passes
the 1% rule, it likely has strong cash flow potential.
Most investors use 0.7-0.8% as a more realistic target
in today's market.
50% Rule
Operating expenses (excluding mortgage) are roughly
50% of gross rental income.
Example: $2,400 rent x 50% = $1,200 expenses
Cash flow = $2,400 - $1,200 - Mortgage payment
This is a quick estimation rule - actual expenses
vary significantly by property age, location and type.
Use this calculator for accurate projections.
Frequently Asked Questions
Cap rate benchmarks vary by market type: expensive coastal markets (NYC, LA, SF, Seattle): 3–5% is typical and often acceptable given strong appreciation. Mid-tier markets (Austin, Phoenix, Nashville): 5–8% is the target range. Midwest and secondary markets: 8–12%+ is achievable. Cap rates above 10% can indicate higher-risk or class C property. Below 4% typically means you're relying primarily on appreciation. The cap rate compares properties regardless of financing - use it to compare multiple deals, then run the full cash flow analysis.
Cash-on-cash (CoC) = Annual pre-tax cash flow ÷ Total cash invested. Total cash invested = down payment + closing costs + immediate repairs. CoC measures the return on YOUR actual cash - it includes financing costs. Cap rate ignores financing (mortgage) - it measures the asset's return independently. Example: same property with 20% down shows different CoC for different investors with different mortgage rates. CoC of 6–8% is decent; 10%+ is strong; negative means the investment costs you money monthly.
The 1% rule: monthly rent ≥ 1% of purchase price. A $350,000 property should rent for $3,500/month. It's a quick screening filter - properties passing the 1% rule tend to have positive cash flow; those below 0.7% often don't. However, it's not a substitute for full analysis. High-cost coastal markets regularly see properties at 0.4–0.6% that investors buy for appreciation. Always run the full calculation with all actual expenses.
Include all of: property tax (use post-purchase assessed value, not current owner's bill), landlord insurance (0.5–1.5% of value), property management (8–12% if used), maintenance (1% of property value/year), CapEx reserve (5–10% of rent for roof, HVAC, appliances), vacancy allowance (5–8% of gross rent), mortgage P&I, HOA fees, utilities you pay. The most commonly missed: vacancy, CapEx reserves, and maintenance. Omitting these inflates projected cash flow by 30–50%.
NOI (Net Operating Income) = Gross Rent − Vacancy − All Operating Expenses. It does NOT subtract mortgage payments. Cash Flow = NOI − Annual Mortgage Payments. NOI is used to compare properties regardless of how they're financed - two investors with different mortgages on the same property have identical NOI but different cash flow. NOI is also used to calculate cap rate. Cash flow tells you whether the investment puts money in your pocket monthly after all obligations.
Property management costs 8–12% of collected rent plus leasing fees (often 50–100% of one month's rent for tenant placement). For out-of-state investing: essential - you cannot handle maintenance calls and tenant issues remotely without one. For local investors with multiple properties: usually worth the cost for the time saved. For a single local property that you self-manage: saves money but requires significant time. This calculator lets you toggle management fees - always model them even if self-managing, as it reveals the true cost of your time.
The IRS allows residential rental property to be depreciated over 27.5 years. On a $400,000 property with $50,000 land value: ($400,000 − $50,000) ÷ 27.5 = $12,727/year tax deduction against rental income. This creates a 'paper loss' that offsets rental income even when cash flow is positive. For investors in the 24–37% tax bracket, depreciation can save $3,000–$5,000/year in taxes. However, depreciation is recaptured at 25% upon sale - consult a tax professional for the full picture.
CapEx (Capital Expenditure) reserve is money set aside monthly for major replacements that don't happen regularly: roof ($8,000–$20,000, 20–25 year life), HVAC ($5,000–$10,000, 15–20 year life), water heater ($1,000–$2,000, 10–12 year life), appliances ($2,000–$4,000), windows ($3,000–$8,000), flooring ($3,000–$8,000). Budget 5–10% of monthly rent. A single roof replacement on a $1,200/month property can wipe 12–18 months of cash flow. Without CapEx reserves, your real return is significantly lower than your projected return.
Rental Income Calculator - The Metrics Every Real Estate Investor Needs to Know
The most common mistake first-time rental property investors make is projecting cash flow based on rent minus mortgage - and ignoring everything else. Vacancy, maintenance, CapEx reserves, property management, and property taxes together typically consume 35–50% of gross rent. Underestimating these costs is the primary reason rental investments underperform expectations. This calculator forces you to model all costs so the projections are accurate.
The four metrics that matter most: (1) Monthly Cash Flow - what's left after all expenses and mortgage. (2) Cap Rate - return on the asset independent of financing. (3) Cash-on-Cash Return - return on your actual cash invested. (4) NOI - operating profitability regardless of how it's financed. A good deal scores well on all four.
The Core Rental Metrics - What Each One Measures
Cap Rate and NOI
- NOI = Gross Rent − Vacancy − Operating Expenses (does NOT subtract mortgage payments)
- Cap Rate = NOI ÷ Property Price × 100
- Cap rate is financing-neutral - compares properties regardless of how they're funded
- Good cap rate benchmarks: coastal markets 4–6%, mid-tier 6–9%, secondary/midwest 8–12%
- High cap rate may indicate higher risk area or property class
Cash-on-Cash and Cash Flow
- Cash Flow = NOI − Annual Mortgage Payments
- Cash-on-Cash = Annual Cash Flow ÷ Total Cash Invested × 100
- Total cash invested = down payment + closing costs + immediate repairs
- CoC measures return on YOUR capital, not the asset's full value
- CoC below 6% is weak; 8–12% is solid; 12%+ is excellent
The Expenses Most Investors Underestimate
Accurate rental analysis requires modelling every recurring cost - not just the obvious ones:
- Vacancy (5–8% of gross rent): Even stable properties have turnover. Each vacancy costs one to two months of rent plus cleaning/repairs between tenants. Budget conservatively even if currently fully occupied.
- CapEx reserve (5–10% of rent monthly): Major systems wear out. Budget for: roof ($8,000–$20,000), HVAC ($5,000–$10,000), water heater ($1,000–$2,000), appliances ($2,000–$4,000), flooring ($3,000–$8,000). Without reserves, one unexpected repair can wipe years of cash flow.
- Maintenance (1% of property value per year): Plumbing, electrical, landscaping, pest control, minor repairs. On a $300,000 property: $3,000/year = $250/month.
- Property management (8–12% of rent): Even if you self-manage now, budget this - it represents the true cost of your time and makes the analysis valid if you ever hire a manager.
- Property tax increases: Tax assessments can rise significantly after a purchase - model with the expected assessed value, not the previous owner's tax bill.
The 1% Rule - A Quick Screening Tool
The 1% rule: monthly rent should equal at least 1% of the purchase price for the property to likely generate positive cash flow. A $300,000 property should rent for $3,000/month. It's a quick first filter - not a substitute for full analysis.
In expensive coastal markets, 0.7–0.8% is a more realistic adjusted benchmark. Properties below 0.6–0.7% typically generate negative or near-zero cash flow and depend on appreciation for returns. These can still be valid investments in high-appreciation markets - but they're appreciation plays, not cash-flow plays.
How this calculator works, and where the numbers come from
The Rental Income Calculator applies the standard formula for this calculation to the values you enter and updates the result as you type. The calculation itself happens in your browser, and the page explains the method so you can check any result by hand.
Please note: Results are estimates. Lender terms, local taxes and fees vary, so confirm figures with your lender or a qualified adviser.