How to use this calculator
Start by entering the purchase details for the property you are evaluating: the asking price, your planned down payment percentage, closing costs, and any rehab or repair budget. Then set the mortgage terms with your expected interest rate and loan length.
Next, enter the expected monthly rental income and any additional income from laundry, parking, or storage. Set a realistic vacancy rate, 5% is a common starting point. Fill in your operating expenses including property tax, insurance, management fees, and maintenance reserves.
The calculator instantly shows monthly and annual cash flow, cap rate, cash-on-cash return, and a full 10-year projection accounting for property appreciation and rent increases.
Key metrics explained
| Metric | Formula | What It Tells You |
|---|---|---|
| Cap Rate | NOI / Purchase Price | Property return independent of financing |
| Cash-on-Cash | Annual Cash Flow / Cash Invested | Return on your actual dollars invested |
| GRM | Price / Gross Annual Rent | Years of rent to cover the purchase price |
| NOI | Income - Operating Expenses | Profit before mortgage payments |
| Cash Flow | Income - All Expenses (incl. mortgage) | Money in your pocket each month |
Frequently asked questions
What is a good cap rate for a rental property?
A good cap rate typically falls between 5% and 10%, depending on the market and property type. In high-demand urban areas, cap rates of 4-6% are common because property values are higher. In smaller markets or higher-risk areas, investors often look for 8-10% or more. Cap rate alone does not tell the full story, so consider cash flow, appreciation potential, and your financing terms as well.
What is cash-on-cash return and how is it different from cap rate?
Cash-on-cash return measures your annual pre-tax cash flow as a percentage of the total cash you invested (down payment, closing costs, and rehab). Cap rate measures the property's net operating income as a percentage of its purchase price, ignoring how you financed it. Cash-on-cash return reflects your actual return on the money you put in, while cap rate evaluates the property's income potential regardless of financing.
How much should I budget for vacancy on a rental property?
Most investors budget 5-10% of gross rental income for vacancy. In strong rental markets with high demand, 5% (about 2-3 weeks per year) may be realistic. In areas with higher turnover or seasonal demand, 8-10% is more conservative and safer for financial planning.
What is the Gross Rent Multiplier and what does it tell me?
The Gross Rent Multiplier (GRM) is the purchase price divided by the annual gross rental income. It tells you roughly how many years of gross rent it would take to pay off the purchase price. A lower GRM generally indicates a better deal. Typical GRMs range from 4 to 12 depending on the market.
Should I include property management fees even if I plan to self-manage?
Yes. Including an 8-12% property management fee in your analysis gives you a realistic picture of the property's true returns. Your time has value, and your plans may change. If you move, buy more properties, or simply get tired of managing, you want to know the deal still works with professional management in place.