Deal Analysis
Rental Property Calculator
Analyze cash flow, cash-on-cash return, cap rate, and GRM for any rental property.
Monthly income & expense breakdown
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How rental property returns work
Rental property returns come down to balancing the income a property generates against the costs of owning and financing it. The most important number for most investors is monthly cash flow — the rent you collect minus vacancy, operating expenses, and the mortgage payment. Positive cash flow means the property pays for itself every month; negative cash flow means you are feeding it out of pocket. Two return metrics put that cash flow in context. Cash-on-cash return compares your annual cash flow to the cash you actually invested (the down payment plus closing costs), answering "how hard is my money working?" A common benchmark is 8% or higher. Cap rate measures the property's unlevered yield — net operating income divided by purchase price — and lets you compare deals regardless of how they are financed. The gross rent multiplier (GRM) is a quick screening ratio: purchase price divided by gross annual rent. A lower GRM suggests a better price relative to rent, though it ignores expenses entirely. Vacancy and operating expenses are where new investors most often underestimate. A reasonable vacancy allowance is 5% of gross rent, and maintenance plus property management often run 8–15% of rent combined. Property taxes and insurance vary widely by location. Once you account for all of these, the cash flow and return figures tell you whether a deal meets your targets before you ever make an offer.
Worked example
Consider a single-family home purchased for $250,000 with a 25% down payment ($62,500), a 7% interest rate on a 30-year loan, and $2,000 monthly rent.
The loan amount is $187,500, which produces a monthly principal-and-interest payment of about $1,248. Vacancy at 5% reduces gross rent to $1,900. Annual property tax of $3,000 ($250/mo), insurance of $1,200 ($100/mo), maintenance at 8% of gross rent ($160/mo), and property management at 8% ($160/mo) total $670/mo. Total monthly expenses including the mortgage are $1,918.
Monthly cash flow is $2,000 − $100 (vacancy) − $670 (operating) − $1,248 (mortgage) = −$18/mo. Annual cash flow is about −$216, and cash-on-cash return is −0.3% on $62,500 invested. Cap rate is $14,160 NOI / $250,000 = 5.7%, and GRM is $250,000 / $24,000 = 10.4. This deal is roughly break-even on cash flow — a signal to negotiate price, raise rent, or find a cheaper market.
Frequently asked questions
What is a good cash-on-cash return for a rental property?
Many investors target 8% or higher, though "good" depends on your market and goals. In high-appreciation markets, investors often accept lower cash-on-cash returns because they expect property value growth to make up the difference. In cash-flow markets, 8–12% is common.
What is the difference between cap rate and cash-on-cash return?
Cap rate measures the property unlevered yield — net operating income divided by purchase price — and ignores financing. Cash-on-cash return measures your leveraged return — annual cash flow divided by cash invested (down payment plus closing costs). Cap rate compares deals; cash-on-cash compares your actual invested capital.
How much should I budget for vacancy and maintenance?
A common rule of thumb is 5% of gross rent for vacancy and 8–10% for maintenance, though older homes may need more. Many investors also set aside 5–8% of rent for property management if they do not self-manage.
Does this calculator account for closing costs and rehab?
This calculator focuses on ongoing cash flow and returns. For a full deal analysis including closing costs and rehab, add those to your down payment when estimating cash invested for cash-on-cash return, or use the BRRRR or fix-and-flip calculators.
Why is my cash flow negative but cap rate looks fine?
Cap rate ignores financing, so a property can have a healthy cap rate but still lose money each month if the mortgage payment is high relative to rent. That is common with high interest rates or low down payments. Raising rent, lowering price, or increasing the down payment can turn it positive.
More Deal Analysis tools
- Cap Rate Calculator Calculate net operating income and capitalization rate for any rental property.
- Cash-on-Cash Return Calculator Measure the annual return on the actual cash you put into a rental property deal.
- Rental Yield Calculator Calculate gross and net rental yield to compare income relative to property price.
- Gross Rent Multiplier Calculator Screen deals fast with the gross rent multiplier and implied price at a target GRM.
- 1% Rule Calculator Check whether a rental deal meets the 1% rule and see the rent needed to pass.
- ARV Calculator Estimate after-repair value and maximum allowable offer for a fix-and-flip or BRRRR deal.