Rental Property Calculator

How to evaluate a rental property

The number most people focus on — monthly cash flow — is important, but it's also the easiest one to manipulate with optimistic assumptions. Undercount expenses by a little, assume zero vacancy, skip the management fee because you're self-managing "for now," and a mediocre deal looks like a great one on paper. The calculator above forces you to put real numbers in; this section explains what those numbers should actually be.

Beyond cash flow, cap rate tells you how the income stacks up against the purchase price independent of your financing — useful for comparing deals apples to apples. Cash-on-cash return tells you the actual yield on the cash you put in, which is what matters for your specific situation. Neither metric alone closes the loop. A deal can have a strong cap rate but poor cash-on-cash if your financing is expensive, or thin cash-on-cash but a strong long-term case if the market appreciates consistently.

Worked example

Take a $250,000 purchase with 25% down ($62,500 cash invested). At 7.25% over 30 years the monthly mortgage payment is roughly $1,285. Gross rent: $2,200. Vacancy at 8% costs $176/month, leaving effective income of $2,024. Operating expenses: property tax $300/mo, insurance $100/mo, maintenance at 8% of effective rent ($162), property management at 10% ($202) — total $764/month. Monthly cash flow: $2,024 − $764 − $1,285 = −$25.

Barely negative — but the cap rate is ($2,024 − $764) × 12 / $250,000 = 6.0%, reasonable for most primary markets. Cash-on-cash at −0.5% doesn't stand alone. Push rent to $2,500 and cash flow reaches +$275/month with a 5.3% CoC return. Get rent to $2,800 and CoC climbs to 10.8% — a deal that holds up without relying on appreciation.

Benchmarks investors actually use

• 1% rule: Monthly rent ≥ 1% of purchase price. A $250k property needs $2,500/month rent to pass. Hard to hit in most markets today, but still a useful quick screen.
• Cap rate 5–7%: Typical for competitive primary markets. Lower risk, lower income yield, higher appreciation potential.
• Cap rate 7–10%: Secondary markets, value-add deals, or small multifamily. Better cash flow; more landlord involvement required.
• Cash-on-cash 6–10%: The range most experienced investors target as a minimum. Below 6% is difficult to justify versus a passive index fund unless appreciation is a strong part of the thesis.

Expenses first-time investors undercount

The most common mistake in rental analysis is listing only taxes and insurance as expenses. A realistic expense budget also includes: vacancy allowance (budget 8% even in tight markets — tenants turn over and units sit), routine maintenance and repairs (8–10% of annual rent), capital expenditure reserve for roof, HVAC, and appliances (5% of rent regardless of the property's age), and property management if you're not self-managing (8–12% of collected rent). Add it up and total operating expenses commonly run 40–50% of gross rent. If your model shows 20%, you are missing something.

BRRRR: pulling your capital back out

The BRRRR strategy — Buy, Rehab, Rent, Refinance, Repeat — lets investors scale a portfolio without continuously raising fresh capital. You buy a distressed property below market, renovate it, place a tenant to stabilize income, then do a cash-out refinance at 75% of the new appraised value. If your all-in cost is below 75% of ARV, the refinance returns your full original investment while the property continues to cash flow with the new, higher loan balance.

A full capital recycle means your effective cash left in the deal reaches zero, producing a technically infinite return on deployed equity. The BRRRR section of this calculator estimates your new loan amount, capital recouped, and remaining cash in the deal using your repair budget and ARV. Use it to stress-test whether a value-add deal pencils before you commit to the acquisition.

Use this calculator as a screening tool, then verify taxes, insurance, rental comps, financing terms, and renovation costs with real quotes before making an offer.

Frequently asked questions