This calculator is based on established real estate and financial principles to ensure accurate investment analysis.
Analyze your potential investment properties instantly with our comprehensive Bigger Pockets Rental Calculator. Determine key metrics like Monthly Cash Flow, Cap Rate, and Cash-on-Cash Return before you make an offer.
Rental Property Investment Analyzer
— Your Key Investment Metrics —
Detailed Calculation Steps
Rental Property Calculator Formulas
Loan Principal (P) = Purchase Price * (1 – Down Payment %)
Monthly Interest Rate (i) = Annual Rate / 1200
Total Payments (n) = Loan Term (Years) * 12
Net Operating Income (NOI) = (Monthly Rent – Monthly Expenses) * 12
Total Cash Invested (TCI) = (Purchase Price * Down Payment %) + Initial Costs
Cap Rate (%) = (NOI / Purchase Price) * 100
Monthly Cash Flow = Monthly Rent – Monthly Expenses – Monthly P\&I Payment
Cash-on-Cash Return (%) = (Monthly Cash Flow * 12 / TCI) * 100
Formula Sources: Investopedia: Capitalization Rate, Forbes Advisor: Loan Payment Formula
Variables Explained
- Property Purchase Price: The final agreed-upon sale price of the asset.
- Initial Repair/Closing Costs: All up-front expenses like title fees, appraisals, inspection fees, and necessary repairs.
- Gross Monthly Rent: The total monthly income expected from the tenant(s) before any expenses.
- Monthly Operating Expenses: Recurring costs like property tax, insurance, HOA fees, property management, and vacancy reserves (excluding the loan payment).
- Down Payment Percentage: The percentage of the purchase price you pay upfront.
- Loan Interest Rate: The annual interest rate on the loan.
- Loan Term (Years): The duration of the mortgage (typically 15 or 30 years).
Related Calculators for Investors
- Amortization Schedule Planner
- 1% Rule Quick Checker
- Debt-to-Income (DTI) Ratio Analyzer
- Max Offer Price Estimator
What is the Bigger Pockets Rental Calculator?
The Bigger Pockets Rental Calculator is an essential tool for real estate investors, designed to quickly and accurately assess the financial viability of a potential rental property. It integrates all the key financial inputs—income, operating expenses, and financing costs—to produce the most critical performance metrics.
By calculating the Monthly Cash Flow, Capitalization Rate (Cap Rate), and Cash-on-Cash (CoC) Return, the calculator provides a clear, objective view of whether a property meets your investment criteria. Using a consistent calculation framework helps investors avoid emotional purchasing and stick to data-driven decisions.
How to Calculate Investment Metrics (Example)
Assuming a $250,000 property with $10,000 in cash costs, $2,500 monthly rent, 20% down, and a 7.0% 30-year loan:
- Determine Loan Payment: The loan amount is $200,000 ($250k * 80%). The monthly principal & interest (P&I) payment is calculated to be $1,330.60.
- Calculate Cash Invested: Total cash outlaid is $50,000 (Down Payment) + $10,000 (Initial Costs) = $60,000.
- Find Monthly Cash Flow: Monthly Rent ($2,500) minus Monthly Expenses ($500) minus P&I Payment ($1,330.60) equals $669.40.
- Calculate Annual NOI: Annual Net Operating Income is ($2,500 – $500) * 12 = $24,000.
- Determine Cap Rate: $24,000 (NOI) / $250,000 (Price) = 9.60%.
- Determine CoC Return: Annual Cash Flow ($669.40 * 12 = $8,032.80) / $60,000 (Cash Invested) = 13.39%.
Frequently Asked Questions (FAQ)
- What is a good Cash-on-Cash Return? Most real estate investors aim for a CoC return of 8% to 12% or higher, depending on the market and risk tolerance.
- Is the Cap Rate more important than Cash Flow? Both are crucial. Cap Rate measures a property’s unleveraged return potential, while Cash Flow measures your immediate, leveraged cash income after all monthly debt obligations.
- Does the calculator include property taxes? Yes, property taxes, insurance, and other non-debt related costs should be included in the “Monthly Operating Expenses” input.
- Why is my Cash Flow negative? Negative cash flow typically means your total monthly expenses (including the mortgage payment) exceed your gross monthly rental income. This often indicates the price is too high or the rent is too low.