Including the mortgage in NOI
It breaks comparability. Cap rate exists precisely to strip financing out.
Cash Flow and Cap Rate Calculator
The three numbers that decide an acquisition, with break-even occupancy.
Assumptions · Purchase
Assumptions · Income
Assumptions · Expenses
Percent of effective gross income
Percent of gross scheduled rent
Analysis
Cap rate
3.73%
- Net operating incomeAnnual
- $15,849
- Monthly cash flow
- -$885
- Cash-on-cash return
- -11.10%
- Debt service coverage
- 0.60
- Break-even occupancy
- 129.02%
- Cash invested
- $95,625
Your analysis is complete.
These are assumptions, not verified facts about a property.
Add an address to carry these numbers into Property Intelligence™ — the full advisory product, with evidence, documents and next steps.
Ask a questionAbout this calculator
- What it is
- A cash flow and cap rate calculator that separates the property's own performance from the effect of how it is financed.
- Who it is for
- Investors comparing properties, and owners checking whether an asset still earns its keep.
- The problem it solves
- Cap rate and cash-on-cash return answer different questions, and mixing them up leads to buying the wrong property confidently.
The formula
Cap rate = NOI ÷ price; Cash-on-cash = annual cash flow ÷ cash invested
Cap rate measures the property, independent of debt. Cash-on-cash measures your position in it, including debt. A property can have a strong cap rate and weak cash-on-cash, or the reverse, depending entirely on the loan.
How to use it
01
Compute NOI
Gross rent less vacancy and all operating expenses, excluding the mortgage.
02
Divide by price
NOI divided by purchase price gives the cap rate.
03
Subtract debt service
NOI less annual mortgage payments gives annual cash flow.
04
Divide by cash invested
Annual cash flow divided by down payment plus closing costs plus rehab gives cash-on-cash return.
When to use it
- Comparing properties bought with different loan structures.
- Judging whether an asking price is defensible against local cap rates.
- Deciding whether to refinance an existing rental.
Common mistakes
Comparing cap rates across markets
A 5% cap in one metro and an 8% cap in another usually reflect different risk, not different skill.
Using asking price instead of all-in cost
Cash-on-cash must include closing costs and any rehab, or the return is overstated.
Questions people ask
What is a good cap rate?
It depends on the market and the risk. In stable metros, 4% to 6% is common; in higher-risk or higher-maintenance markets, 7% to 10%. A cap rate is only meaningful against comparable properties in the same area.
What is the difference between cap rate and cash-on-cash return?
Cap rate measures the property without debt — NOI divided by price. Cash-on-cash measures your investment with debt — annual cash flow divided by the cash you put in.
Does cap rate include the mortgage?
No. Cap rate deliberately excludes financing so two properties can be compared on the asset alone.
What Property Intelligence™ adds
Property Intelligence grounds NOI in the verified tax bill, documented insurance and observed condition for one address instead of a round assumption.
The next calculation
Calculator: Cash Flow and Cap Rate Calculator