Omitting capital reserves
Roofs, heating systems and water heaters have finite lives. Setting nothing aside makes the first year look profitable and the fifth look catastrophic.
Rental Property Calculator
Rent, operating expenses, debt service, and the monthly reality.
Assumptions · Purchase
Percent of purchase price
Assumptions · Income
Assumptions · Operating expenses
Enter 0 if the property has no association
Percent of effective gross income
Percent of gross scheduled rent
Analysis
Monthly cash flow
-$885
- Effective gross incomeAnnual, after vacancy
- $29,640
- Operating expensesAnnual
- $13,791
- Net operating incomeAnnual, before financing
- $15,849
- Debt serviceAnnual
- $26,463
- Cap rate
- 3.73%
- Cash-on-cash return
- -11.10%
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 rental property calculator that turns rent, operating expenses, and financing into monthly cash flow, cap rate and cash-on-cash return.
- Who it is for
- Investors evaluating a long-term rental before making an offer.
- The problem it solves
- Rent minus mortgage is not cash flow. Vacancy, maintenance, capital reserves and management are the expenses that decide whether a rental actually makes money.
The formula
NOI = gross rent − vacancy − operating expenses; Cash flow = NOI − debt service
Cap rate is NOI divided by purchase price. Cash-on-cash return is annual cash flow divided by total cash invested. Operating expenses exclude the mortgage — that is what makes cap rate comparable across properties financed differently.
How to use it
01
Start from gross rent
Use market rent supported by comparable leases, not the seller's pro forma.
02
Subtract vacancy
Apply a vacancy allowance — 5% to 8% is typical for stable markets.
03
Subtract operating expenses
Taxes, insurance, management, maintenance, capital reserves, and any owner-paid utilities.
04
Compute NOI and cap rate
NOI is what remains. Divide by purchase price for cap rate.
05
Subtract debt service
What is left after the mortgage is cash flow. Divide annual cash flow by cash invested for cash-on-cash.
When to use it
- Screening a rental listing before touring it.
- Comparing two rentals in different tax jurisdictions.
- Deciding the highest price at which a property still cash flows.
Common mistakes
Assuming zero vacancy
Even a well-run rental turns over. A single month vacant costs about 8% of annual rent.
Self-management at no cost
Price management at market — 8% to 10% — even if you do it yourself. Otherwise the return is really a wage.
Trusting a seller's pro forma
Pro forma rent is the rent the seller believes is achievable. Verify it against signed leases and comparable listings.
Questions people ask
What is a good cash flow on a rental property?
Positive after vacancy, maintenance, capital reserves and management are all funded. Many investors target $100 to $200 per unit per month, but the honest test is whether the property survives a vacancy and a major repair in the same year.
What expenses should I include?
Property taxes, insurance, management, routine maintenance, capital reserves, vacancy allowance, owner-paid utilities, and any HOA dues. The mortgage is not an operating expense — it is subtracted after NOI.
What is the 1% rule?
A screening shortcut: monthly rent near 1% of purchase price. It is a filter for which properties to analyze, never a substitute for analyzing them.
What Property Intelligence™ adds
Property Intelligence verifies the tax bill, reads any leases and inspection reports you upload, prices condition against real findings, and states a rental outlook with its confidence and its gaps.
The next calculation
Local pages that use this calculator
- Estimate Albany rental cash flow
Will this Albany multifamily property produce acceptable returns after the real expenses are counted?
Calculator: Rental Property Calculator