How this rental property calculator works
Enter the purchase price and financing, the market rent, and the operating costs — including the three percentages that separate honest underwriting from wishful thinking: vacancy, maintenance reserve, and management. The calculator amortizes the mortgage, subtracts every cost from the rent, and reports monthly cash flow, cap rate, and cash-on-cash return, plus a five-year projection that layers in rent growth, appreciation, and the equity you build through loan paydown.
The waterfall chart is the heart of the page. It starts with the full rent check on the left and steps down through each cost — vacancy, management, maintenance, taxes, insurance, HOA, and finally the mortgage — until what's left is your net cash flow on the right. Most first-time landlords have never seen their deal drawn this way, and it's clarifying: rent is not profit; rent is a gross number that seven hands touch before yours.
Cap rate vs. cash-on-cash: two questions, two numbers
The two headline metrics answer different questions, and confusing them is the most common rookie analysis error. Cap rate asks: is this a good property? It divides net operating income — rent minus vacancy and operating costs, but not the mortgage — by the purchase price:
Cap rate = NOI ÷ purchase price
Cash-on-cash = annual cash flow ÷ cash invested
Because cap rate ignores financing entirely, it lets you compare a property bought with cash against one bought with 20% down, or your deal against the market. Cash-on-cash asks the more personal question: is this a good use of my money? It divides the actual cash hitting your account after the mortgage by the cash you put in. Leverage is the wedge between the two: borrow at a rate below the cap rate and cash-on-cash rises above it (positive leverage); borrow above the cap rate and financing is actively costing you (negative leverage). Watching which side of the line a deal falls on tells you whether the mortgage is working for you or against you.
The 1% rule — a screen, not a verdict
The 1% rule says monthly rent should be at least 1% of the purchase price: $3,000 of rent on a $300,000 house. Properties that clear the bar have a fighting chance at positive cash flow with conventional financing; properties far below it almost never get there, because taxes, insurance, and the mortgage consume everything. The calculator shows your rent-to-price ratio in the results strip so you can see instantly where a deal stands. Treat it as a first filter — a high-tax county or steep HOA can sink a property that passes, and a low-cost market can work slightly under it. In expensive coastal metros, almost nothing passes; that's not a calculator error, it's the market telling you those prices are bets on appreciation rather than income.
Vacancy and maintenance: the lines first-timers skip
Seller pro formas and first-time landlord spreadsheets share a signature omission: rent arrives twelve months a year and nothing ever breaks. Reality disagrees. Every tenancy ends eventually, and the gap between tenants — cleaning, repairs, listing, showings, screening — typically costs two to four weeks of rent, which is why underwriting uses a vacancy rate of 5–8%. One month empty is 8.3% of the year's income; budgeting 0% means one turnover wipes out an entire year of thin cash flow.
Maintenance is the same story with a lag. Water heaters, garbage disposals, roof leaks, and appliance deaths don't appear monthly — they appear suddenly, in expensive clusters. A reserve of 5–15% of rent (more for older properties) converts those surprises into a planned line item. And note what the reserve doesn't cover: major capital expenditures like a roof, HVAC system, or repipe. Prudent investors hold a separate capex reserve on top. A deal that only cash-flows when you delete these lines isn't cash-flowing — it's borrowing from your future self at an unknown interest rate.
What the five-year projection shows — and what's not modeled
The projection grows rent and operating costs at your rent-growth rate, holds the mortgage payment fixed, and appreciates the property at your chosen rate. Two things emerge. First, fixed-rate leverage plus rent growth widens cash flow every year — a thin first-year margin can triple by year five because the biggest cost never rises. Second, the equity column usually dwarfs the cash flow column: between appreciation and principal paydown, most of a leveraged rental's early return arrives silently on the balance sheet, not in the bank account.
What's deliberately out of scope: closing costs (2–5% of price, which lower true cash-on-cash), capital expenditures beyond the maintenance reserve, landlord-paid utilities, income taxes on the rental profit, and the substantial tax benefits of depreciation. If you're planning to tap home equity for the down payment, the HELOC payment calculator prices that borrowing — its payment belongs in this page's expense column if you go that route. And to see what the down payment would do left alone in the market instead, the multi-phase compound interest calculator is the honest benchmark every rental has to beat.
Frequently asked questions
What's a good monthly cash flow?
Many investors target $100–$300/month per unit after all expenses and reserves — but judge it against cash invested. $200/month on $30,000 down (8% cash-on-cash) beats $250/month on $100,000 down.
What is cap rate?
Net operating income (rent minus vacancy and operating costs, before the mortgage) divided by purchase price. It measures the property independent of financing; residential cap rates typically run 4–8%.
Cap rate vs. cash-on-cash — what's the difference?
Cap rate evaluates the property (ignores the mortgage); cash-on-cash evaluates your deal (annual cash flow after the mortgage ÷ cash you put in). Leverage pushes them apart in either direction.
What is the 1% rule?
A screen: monthly rent ≥ 1% of purchase price. Deals that clear it have a shot at positive cash flow with 20% down; deals far below it rarely do. It's a filter to decide what's worth a full analysis — not the analysis.
What is the 50% rule?
Expect operating expenses (everything except the mortgage) to eat about half of gross rent over the long run. If your line items total far less than 50%, you've probably forgotten something.
What vacancy rate should I use?
5–8% of gross rent — two to four weeks a year for turnover, cleaning, and re-listing. Using 0% is the classic first-timer mistake: one empty month is 8.3% of annual rent.
How much should I reserve for maintenance?
5–15% of rent depending on age and condition, or roughly 1% of property value per year. This covers routine repairs — big-ticket capex (roof, HVAC) deserves its own reserve on top.
What does property management cost?
Usually 8–10% of collected rent plus a leasing fee of half to one month's rent per new tenant. Underwrite it even if you self-manage — a deal that needs free labor to work is a job, not an investment.
Is negative cash flow ever OK?
Some investors accept it betting on appreciation and rent growth, but it means feeding the property from your salary with no buffer. Conservative underwriting treats it as a signal to renegotiate or walk.
What does this calculator leave out?
Closing costs, major capex, landlord-paid utilities, licensing fees, income taxes, and depreciation benefits. It's a screening tool — build a full pro forma before making an offer.
How much do rent growth and appreciation matter?
Enormously, over time — they're the compounding half of the return. But they're assumptions. Underwrite the deal to work on today's numbers and treat growth as upside, not as the thing that rescues the deal.
Does mortgage principal count as an expense?
For cash flow, yes — the full payment leaves your account monthly. But principal converts to equity you recover at sale, which is why the projection tracks equity separately from cash flow.
What is NOI?
Effective rent (after vacancy) minus operating expenses, before the mortgage. It's the cap-rate numerator, and lenders divide it by your annual mortgage payment to compute DSCR — typically requiring 1.2+.
This calculator is an estimate for education, not investment, lending, or tax advice. It excludes closing costs, capital expenditures, income taxes, and depreciation, and every projection rests on assumptions that real markets will ignore. Verify all numbers — especially taxes, insurance quotes, and market rent — before making an offer.