Rental Property Calculator
The full operating statement and every return metric — with the parts of the return you can spend kept separate from the parts you cannot.
Purchase
Financing
Income
Fixed expenses
Assumptions
Reserves you do not spend every month are still costs. Drag them to zero to see what the optimistic version of this deal looks like.
Appreciation starts at 0% on purpose. It is a forecast, not a return you have earned.
Total first-year return
—
Select a payment structure to compute.
Results
| Gross scheduled income | — |
|---|---|
| Less vacancy | — |
| Effective gross income | — |
| Operating expenses | — |
| Net operating income | — |
| Annual debt service | —Select a payment structure |
| Annual cash flow | —Select a payment structure |
| Cash invested | — |
| Cash-on-cash return | —Select a payment structure |
| Cap rate | — |
| DSCR | — |
| Year-one principal paydown | — |
| Year-one appreciation | — |
| Total first-year return | —Select a payment structure |
| Expense ratio | — |
| Break-even occupancy | —Select a payment structure |
| Rent to price | — |
Estimates only, based on the assumptions shown above. Actual returns depend on real vacancy, real repair costs, real rent growth, financing terms at close, and taxes — none of which this tool can know. Not a loan commitment, an offer of credit, or investment advice.
One number cannot tell you whether a rental is a good deal
A rental produces returns in four ways, and lumping them into a single headline percentage hides the thing you most need to know: how much of the return is money, and how much is a promise.
Cash flow is the only component you can spend. It shows up monthly, it funds the reserves, and it is what keeps you solvent when a tenant leaves. Principal paydown is genuinely real — on the default scenario it is around $1,815 in year one, four times the cash flow — but you cannot access it without selling or refinancing, both of which cost money. Appreciation is a forecast about a market until the day you actually transact. And tax treatment, depreciation especially, is real but depends entirely on your income and your filing position, which is why this page computes the first three and leaves the fourth to your accountant.
This is why appreciation starts at zero here. Set it to a plausible- sounding 3 percent and total return on the default deal jumps several points — not because the property got better, but because you made a prediction. The tool flags it when appreciation is doing more than half the work, because at that point you are not underwriting a rental, you are betting on a market and collecting rent while you wait.
The three ratios above answer genuinely different questions. Cap rate is unlevered — net operating income over total cost — so it describes the property and lets you compare two buildings without financing muddying it. Cash-on-cash is levered, so it describes your position rather than the asset; change the down payment and it moves while cap rate does not. DSCR is the lender’s question: does the income cover the debt, and by how much. A deal can look fine on cap rate and fail on DSCR, which is how a property that pencils on paper turns out to be unfinanceable at the leverage you wanted.
Two quick screens are worth knowing even though neither is analysis. The 1% rule — monthly rent at 1 percent of price — is a filter for deciding which listings deserve five minutes, and nothing more; plenty of properties clear it and still lose money to taxes and insurance. The expense ratio is the better sanity check: operating costs usually land between 35 and 50 percent of collected income. If your model comes out well under 35, the most likely explanation is not a bargain but a missing line — usually CapEx, management, or an honest vacancy figure.
Every assumption driving these numbers is a slider you can see and move. That is deliberate. A projection you cannot inspect is a projection you cannot argue with, and the assumptions are where nearly all the disagreement about a deal actually lives.
Methodology
- Effective gross income = (rent + other income) × 12, less vacancy.
- Net operating income = effective gross income less taxes, insurance, HOA, utilities, other, maintenance, CapEx reserve and management. Debt service excluded by definition.
- Cap rate = NOI ÷ (purchase price + rehab) × 100.
- Cash-on-cash = (NOI − annual debt service) ÷ cash invested × 100, where cash invested is down payment + closing costs + rehab + points.
- DSCR = NOI ÷ annual debt service.
- Year-one principal paydown = original balance less the balance after twelve payments, which is
L(1+i)¹² − P((1+i)¹² − 1)/i. Zero on an interest-only loan. - Total first-year return = (cash flow + paydown + appreciation) ÷ cash invested × 100.
- Break-even occupancy = (operating expenses + debt service) ÷ gross scheduled income.
Appreciation applies to the after-repair value when you enter one, and to purchase price plus rehab otherwise. Payment structure is required and has no default: interest-only raises cash flow and every return beneath it while retiring no principal.
Excluded: income tax, depreciation, rent growth, expense inflation, refinancing and selling costs. Currency is computed in exact integer cents throughout, including the amortization exponential.
Frequently asked questions
- What makes up the return on a rental property?
- Four things, and they behave completely differently. Cash flow is money you can spend this year. Principal paydown is real equity, but locked up until you sell or refinance. Appreciation is a forecast, not a return, until the day you actually transact. Tax treatment — depreciation in particular — is real but depends entirely on your own position. This calculator computes the first three separately and leaves the fourth to your accountant.
- Why does appreciation default to zero?
- Because it is the assumption that turns a mediocre deal into a good-looking one, and it is the assumption you have the least control over. Set it to 3 percent and almost any property shows a respectable total return; that number is a forecast about a market, not a measure of the asset. Starting at zero shows you what the property produces on its own. Raise it deliberately if you want to model a view, and notice that the tool warns you when appreciation is carrying more than half the return.
- Cap rate, cash-on-cash, or total return — which should I use?
- They answer different questions, so use all three. Cap rate compares properties to each other independent of financing. Cash-on-cash tells you what your money earns this year. Total return tells you what the whole position produced including equity you cannot spend yet. A deal that looks good on all three is genuinely good. A deal that looks good on only one is usually being sold to you on that one.
- What is the 1% rule and is it still useful?
- It is the rough screen that monthly rent should be at least 1 percent of the purchase price. It survives as a filter, not as analysis — useful for deciding which fifty listings to ignore, useless for deciding whether to buy one. Plenty of properties clear 1 percent and lose money on taxes and insurance; plenty at 0.7 percent work fine in low-cost, low-tax markets. Use it to sort, then run the actual numbers.
- What is a normal expense ratio for a rental?
- Operating expenses commonly land between 35 and 50 percent of effective gross income for single-family and small multifamily, before debt service. Well under 35 percent usually means something is missing from the model rather than that you found an unusually cheap property — most often CapEx, management, or a realistic vacancy figure.
- Do I have to give you an email address?
- No. The calculator is free and ungated. Your numbers stay in your browser — the shareable link encodes them into the URL rather than sending them to a server.
Put this calculator on your site
Free to use on any site, no permission needed and no attribution requirement beyond the credit line included below. Paste this wherever the calculator should appear.
<iframe src="https://investorlabs.io/embed/rental-property-calculator/" title="Rental Property Calculator by InvestorLabs" width="100%" height="720" loading="lazy" style="border:1px solid #e5e7eb;border-radius:8px;max-width:100%"></iframe>
<p style="font:14px/1.5 system-ui,sans-serif;margin:8px 0 0">Calculator by <a href="https://investorlabs.io/tools/rental-property-calculator/">InvestorLabs</a></p>
<script src="https://investorlabs.io/embed.js" async></script>The last line is optional — it resizes the frame to fit the calculator as answers appear. Without it the frame keeps the fixed height above and scrolls instead.