Rental Property Calculator
Analyze cash flow and ROI for real estate investments.
Purchase Details
Income & Expenses
Monthly Financial Summary
Investment Returns
How to Analyze Rental Property Investments
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. Successful real estate investors rely on accurate math to determine if a specific deal makes financial sense. This Rental Property Calculator helps you break down the income, expenses, and ultimate return on investment (ROI) for any potential purchase.
Key Metrics Explained
1. Net Operating Income (NOI)
NOI is a critical metric in real estate analysis. It represents the profitability of a property before adding in the costs of financing and taxes. It is calculated by subtracting all operating expenses (insurance, property tax, maintenance, HOA, management fees) from the total rental income. A positive NOI indicates the property can support its own operations.
2. Cash Flow
Cash flow is the net amount of cash moving in or out of the investment each month. It is calculated as NOI minus Debt Service (Mortgage Payments).
- Positive Cash Flow: You are making money every month after paying all bills.
- Negative Cash Flow: The property costs you money out-of-pocket every month.
3. Cash on Cash Return (CoC)
While cash flow tells you the dollar amount you earn, the Cash on Cash Return tells you how hard your money is working. It is calculated by dividing your annual pre-tax cash flow by the total cash invested (Down Payment + Closing Costs + Rehab Costs). A CoC return of 8-12% is often considered a solid benchmark for rental properties, though this varies by market.
Using the 1% Rule
A common "rule of thumb" for screening properties is the 1% rule. It states that the monthly rent should be at least 1% of the total purchase price. For example, a $200,000 house should rent for at least $2,000 per month. While this calculator provides a much more detailed analysis, the 1% rule is a quick way to filter out properties that are unlikely to cash flow positively.
Estimating Expenses
One of the biggest mistakes new investors make is underestimating expenses. Beyond the mortgage, you must account for:
- Vacancy: Properties won't be rented 365 days a year. Budget 5-8% for vacancy.
- Maintenance & CapEx: Roofs leak and water heaters break. Setting aside 5-10% of rent for repairs saves you from future shock.
- Property Management: If you don't manage it yourself, expect to pay 8-10% of the monthly rent to a manager.