Rental Property Calculator

A rental property is only a good investment if the numbers work. Here's how to use this calculator to find out:

1. Enter the purchase details — price, down payment, interest rate, and loan term. Investment properties typically require 20-25% down and carry rates 0.5-1% higher than primary residence loans.
2. Set the expected rent — check comparable rentals in the area. Be realistic, not optimistic. Add any other income sources like parking or storage.
3. Adjust operating expenses — expand the expenses section to dial in property tax, insurance, maintenance, vacancy, and management fees. Don't skip these — they make or break the deal.
4. Read the results — positive cash flow means the property pays for itself. Check cap rate (aim for 5-10%), cash-on-cash return (aim for 8%+), and the 1% rule as quick sanity checks.

• Net Operating Income (NOI) — gross income minus operating expenses, before mortgage. It tells you what the property earns on its own, regardless of financing.
• Cap Rate — NOI divided by purchase price. Useful for comparing properties. A 6% cap rate is solid in most markets; 8%+ is strong.
• Cash-on-Cash Return — annual cash flow divided by your total cash invested. This is the return on YOUR money, after financing. 8-12% is a good target.
• Cash Flow — what's left after every bill is paid, including the mortgage. Even $100-200/month positive cash flow matters because you're also building equity and getting tax benefits.
• The 1% Rule — monthly rent should be at least 1% of the purchase price. Quick filter for screening deals, but don't rely on it alone.

• Ignoring vacancy — every property sits empty between tenants. Budget 5-8% of rent for vacancy or you'll be surprised.
• Underestimating maintenance — roofs, HVAC, plumbing, appliances all break eventually. 1-2% of property value per year is a safe budget.
• Skipping the management fee — even if you self-manage, include 8-10% for management in your numbers. It's the true cost of operating the rental, and you may want to hire a manager someday.
• Overpaying based on emotion — run the numbers before falling in love with a property. A beautiful house that loses $300/month is a liability, not an investment.