Property Details
Financing & Expenses
(Taxes, Insurance, HOA, Maintenance)
Investment Analysis
Total Cash Needed:
$0.00
Monthly Mortgage Payment:
$0.00
Monthly Cash Flow:
$0.00
Net Operating Income (Annual):
$0.00
Cap Rate:
0.00%
Cash on Cash Return:
0.00%
How to Analyze a Rental Property Investment
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. To succeed, investors must understand the key financial metrics that determine whether a property is a "deal" or a "dud." This Rental Property Calculator helps you evaluate the Cash on Cash Return, Cap Rate, and monthly Cash Flow.
Key Metrics Explained
1. Cash Flow
Cash flow is the profit you bring in each month after all expenses are paid. It is calculated as:
Gross Rent – (Mortgage + Taxes + Insurance + HOA + Maintenance + Vacancy)
Positive cash flow ensures the property pays for itself and provides you with passive income.
2. Cash on Cash Return (CoC)
This is arguably the most important metric for investors using financing. It measures the annual return on the actual cash you invested, not the total property price.
- Formula: (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
- Total Cash Invested: Includes down payment, closing costs, and renovation costs.
- Good Target: Many investors aim for 8-12% or higher.
3. Capitalization Rate (Cap Rate)
Cap rate measures the property's natural rate of return assuming you bought it with all cash. It helps compare properties regardless of financing.
- Formula: (Net Operating Income / Purchase Price) × 100
- Net Operating Income (NOI): Total Revenue – Operating Expenses (excluding mortgage payments).
How to Use This Calculator
Enter the purchase price, your financing details, and your estimated expenses. Be honest with your "Annual Operating Expenses" entry—don't forget to include property taxes, landlord insurance, expected vacancy rates (usually 5-8%), and maintenance reserves (usually 5-10% of rent). The calculator will instantly show you how hard your money is working for you.