Rental Property Calculator
Analyze rental property cash flow, ROI, cap rate and return on investment.
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Frequently Asked Questions
What is a good cap rate for rental property?
A cap rate of 5-10% is generally considered good for residential rental property. Urban/coastal markets (NYC, SF, LA) often have cap rates of 3-5% due to appreciation potential. Midwest and Sun Belt markets may offer 7-10%+ cap rates. Cap rate = NOI / Purchase Price. Higher cap rates mean more income relative to price but may reflect higher risk.
What is cash-on-cash return?
Cash-on-cash return measures annual cash flow as a percentage of your actual cash invested (down payment plus closing costs). It is the most practical measure of rental property performance for leveraged investors. A cash-on-cash return of 6-12% is considered solid. Unlike cap rate, it accounts for your financing structure.
What expenses should I budget for a rental property?
Budget for: property taxes (1-2% of value/year), insurance ($100-200/month), maintenance (1% of value/year), property management (8-12% of rent if using a manager), vacancy (5-10%), CapEx reserves for big repairs like roof, HVAC, appliances (5-10% of rent). New landlords frequently underestimate expenses by 30-50%.
A $300,000 rental at 2026 rates: the full cash flow
The example: a $300,000 single family rental bought with 20% down ($60,000) and $9,000 of closing costs, financed at 7% over 30 years. It rents for $2,400 a month. The numbers below are what the deal actually produces, not what the listing claims.
| Line | Annual | Notes |
|---|---|---|
| Gross rent | $28,800 | $2,400 x 12 |
| Vacancy (5%) | -$1,440 | About 2.5 weeks a year empty |
| Effective rent | $27,360 | |
| Property tax | -$3,600 | 1.2% of value |
| Insurance | -$1,500 | Landlord policy |
| Maintenance and repairs (1% of value) | -$3,000 | Averages the years with a water heater and the years without |
| Management (8% of collected rent) | -$2,189 | Zero if self-managed, but the hours are real |
| Net operating income | $17,071 | Cap rate 5.7% on the $300,000 price |
| Mortgage payments | -$19,161 | $1,596.73 x 12 on $240,000 at 7% |
| Cash flow | -$2,090 | About -$174 a month |
Debt service coverage ratio 0.89: the rent does not cover the mortgage. Most lenders want 1.20 to 1.25 on an investment loan, so this deal would be hard to finance at this price and rent.
What it takes to make this deal work
Rent of $3,000 (the old 1% rule: monthly rent at 1% of price) turns the cash flow positive at about $350 a month and the DSCR to 1.22. A price of $245,000 at the same $2,400 rent brings cash flow to about $120 a month through a smaller loan. A rate of 5.5% instead of 7% cuts the mortgage to $16,350 a year and brings cash flow to about $60 a month. In most US metros in 2026, the 1% rule is out of reach for single family homes, which is why many rentals bought at market price lose money monthly and rely on appreciation and tax benefits to justify themselves.
The returns beyond cash flow
Principal paid down in year one: about $2,440. Appreciation at 3%: $9,000. Depreciation deduction: the building (say $240,000 of the $300,000) over 27.5 years is $8,727 a year, which shelters the small income and can offset other passive income. Adding those to the -$2,090 cash flow gives a total first-year return of about $9,350 on $69,000 invested, 13.5%, but $9,000 of that is unrealized and the cash flow is still negative. An investor who cannot carry $174 a month plus a surprise roof should not rely on the paper return.
Cash-on-cash versus cap rate
Cap rate (NOI / price, 5.7% here) describes the property regardless of financing and is what to compare across deals. Cash-on-cash (cash flow / cash invested, -3.0% here) describes your return with your loan. A deal with a cap rate below the mortgage rate has negative leverage: borrowing makes the return worse, which is exactly this case at 5.7% against 7%. Positive leverage needs a cap rate above the rate on the loan.
Costs the calculator above includes that listings leave out
Capital expenditures (roof, HVAC, water heater, flooring) at another 0.5% to 1% of value a year set aside, turnover costs of one to two months of rent each time a tenant leaves, leasing fees of half to one month of rent, landlord-paid utilities in some markets, HOA fees, and the income tax on the net profit once depreciation runs out. A rental that still cash flows after all of them is a good deal; most do not at 2026 prices and rates, and the honest calculator says so.