Rental Property Calculator
Analyse a rental in one pass — net operating income, cap rate, cash-on-cash return, DSCR and monthly cash flow.
Content updated August 10, 2026
Net operating income excludes mortgage payments, capital expenditure, depreciation and income tax, so the cap rate describes the property rather than your financing. Cash-on-cash return does reflect leverage. Estimates only, not investment advice.
A rental only works if the numbers do. This calculator takes a purchase price, the financing behind it, the rent it should produce and the cost of running it, then reports the measures investors and lenders actually use: net operating income, capitalization rate, cash-on-cash return, debt service coverage ratio and monthly cash flow.
Each ratio answers a different question, which is why they are shown together. The cap rate describes the property. Cash-on-cash describes your position in it. DSCR describes what a lender sees. A deal can look strong on one and weak on another.
The Rental Property formula
NOI = (gross rent + other income) × (1 − vacancy) − operating expenses; Cap rate = NOI ÷ price × 100; Cash-on-cash = annual cash flow ÷ cash invested × 100; DSCR = NOI ÷ annual debt serviceoperating expenses exclude mortgage payments, capital expenditure, depreciation and income tax · annual cash flow = NOI − annual debt service · cash invested = down payment + closing costs + renovation costs.
Worked example
A property at 250,000 with 25% down, 6,000 closing and 4,000 renovation costs, financed at 7% over 30 years, renting for 2,200 a month with a 5% vacancy allowance and 700 a month of operating expenses: gross rent is 26,400, effective gross income 25,080, and NOI 16,680. That is a 6.67% cap rate. The 187,500 loan costs about 1,247 a month, so annual cash flow is roughly 1,716 on 72,500 invested — about 2.37% cash-on-cash, with a DSCR near 1.11.
Assumptions, rounding, and limitations
Assumptions
- Net operating income excludes debt service, capital expenditure, depreciation and income tax, following standard income-approach practice.
- The vacancy allowance is applied to gross scheduled income before operating expenses are subtracted.
- Debt service is a fixed-rate, fully amortizing monthly payment over the entered term, derived from the standard annuity formula.
- Cash invested is the down payment plus closing and renovation costs; no other acquisition costs are assumed.
- Rent and expenses are treated as constant across the year. No rent growth, expense inflation or rate change is modelled.
Rounding: All figures are computed at full floating-point precision. Currency amounts are rounded to the nearest whole unit for display and ratios to two decimal places; bands and comparisons use the unrounded values.
Limitations
- Excludes capital expenditure reserves. A property that barely breaks even before capex will usually lose money after it.
- Excludes appreciation, principal paydown, depreciation and all tax treatment, which vary by country and by owner and can dominate long-run returns.
- Cash-on-cash return is a single-year pre-tax measure and is not an internal rate of return over a holding period.
- Transaction taxes such as stamp duty or transfer tax are not modelled separately; include them in closing costs if they apply in your market.
- This is a general analysis tool, not investment, tax or lending advice.
Sources
- Debt Service Coverage Ratio — Multifamily Selling and Servicing Guide — Fannie Mae
- Financial Stability Report — Asset Valuations (capitalization rates) — Board of Governors of the Federal Reserve System
Start with net operating income
Every other figure is built from net operating income, so it is worth defining precisely. Gross scheduled income is the rent the property should collect over a year. Subtract a vacancy allowance for the months it sits empty and you have effective gross income. Subtract operating expenses from that and the remainder is NOI.
Operating expenses mean the recurring cost of running the property: property tax, insurance, repairs and maintenance, management fees, HOA or service charges, and any utilities you cover. They do not include the mortgage payment, capital expenditure, depreciation or income tax.
That exclusion is deliberate rather than an oversight. Keeping financing out of NOI means two buyers looking at the same building compute the same number, which is what makes properties comparable at all.
Why the ratios disagree, and what that tells you
The cap rate is NOI divided by price. Because it ignores your mortgage, it is the closest thing to a like-for-like comparison between two buildings in the same market.
Cash-on-cash return divides annual pre-tax cash flow by the cash you actually put in — down payment plus closing and renovation costs. Leverage moves this number in both directions: borrowing can lift the return when the property out-earns the loan, and deepen the loss when it does not.
DSCR is NOI divided by annual debt service, and it is the lender's view rather than yours. Below 1.00 the property does not cover its own loan payments.
When cap rate looks healthy but cash-on-cash looks poor, the property is fine and the financing is expensive. When both look poor, the price is the problem.
What this calculator does not model
Cash flow is pre-tax and excludes capital expenditure — the roof, the boiler, the repaint that arrives every fifteen years rather than every month. Many investors reserve for these separately, and a property that only just breaks even before capex is likely to lose money after it.
It also excludes appreciation, principal paydown, depreciation and the tax treatment of rental income, all of which vary by country and by owner. Those can dominate long-run returns, so a negative cash-flow result is not automatically a bad investment — it simply means the property is not paying for itself month to month.
Frequently asked questions
▶What is a good cash-on-cash return on a rental property?
There is no universal threshold — it depends on your market, your financing and what else you could do with the money. The useful comparison is against alternatives at similar risk rather than against a fixed target number.
▶Should the mortgage payment be included in operating expenses?
No. Net operating income excludes debt service by definition, which is what lets the cap rate compare properties independently of how each buyer financed them. Enter the loan separately and the calculator subtracts debt service afterwards to reach cash flow.
▶What vacancy rate should I assume?
It varies by market and property type. Using zero assumes the unit is never empty and never between tenants, which will overstate income. Local letting agents and published market data are better guides than a default.
▶Does this work outside the United States?
Yes. Net operating income, cap rate, cash-on-cash return and DSCR are arithmetic definitions, not jurisdiction-specific rules, so they apply in any market. Choose your currency at the top. Tax treatment and transaction costs do differ by country and are not modelled here.
▶Why is my cash flow negative when the cap rate looks fine?
That combination points at the financing rather than the building. A healthy cap rate with negative cash flow usually means the loan is large or expensive relative to the income the property produces.
▶What is the 1% rule?
A screening shortcut where monthly rent is compared to purchase price, with 1% used as a rough filter. The calculator shows this as rent-to-price. It is a first-pass screen, not an analysis — it ignores expenses, financing and vacancy entirely.
Learn more
Related calculators
Work out capitalization rate from net operating income and price, and value an income stream at a target rate.
Open calculator →Measure annual pre-tax cash flow against the cash you actually invested, including closing and renovation costs.
Open calculator →Calculate debt service coverage ratio — the margin between a property's net operating income and its loan payments.
Open calculator →Disclaimer: Rental Property Calculator results are estimates for general information and education only, and are not financial, tax, legal or medical advice. Verify important decisions with a qualified professional.