Rental Property Calculator
Analyze rental property investments using cash flow, cap rate, and IRR calculations.
Purchase & Financing
Total purchase price of the rental property.
Percentage of the purchase price paid upfront in cash.
One-time purchase costs such as appraisal, title, and legal fees.
One-time renovation or repair costs before renting.
Annual percentage rate (APR) for the mortgage.
Length of the mortgage loan in years.
Rental Income
Expected gross monthly rental income.
Percentage of time the property is expected to be vacant.
Expected yearly rent growth.
Operating Expenses
Annual management fee as a percentage of rental income.
Current annual property tax amount.
Expected annual percentage increase in property taxes.
Annual landlord insurance cost.
Expected annual percentage increase in insurance.
Annual homeowners association fees, if applicable.
Expected annual percentage increase in HOA fees.
Estimated yearly maintenance and repair costs.
Expected annual percentage increase in maintenance costs.
Additional annual operating costs such as utilities or landscaping.
Expected annual percentage increase in other expenses.
Exit Strategy
Number of years you plan to hold the property.
Expected sale price at exit.
Percentage of sale price lost to commissions and closing costs.
First Year Breakdown (Annual)
First Year Metrics
Over the Holding Length (Summary)
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.
About this calculator
This rental property calculator helps analyze real estate investments by estimating cash flow, cap rate, cash-on-cash return, and internal rate of return (IRR).
It combines rental income, operating expenses, financing terms, and exit assumptions to evaluate both short-term cash flow and long-term investment performance.
What each input means
Purchase & financing
- Purchase price is the total amount you pay to acquire the property. This is the base value used to calculate your loan amount and various metrics.
- Down payment (%) is the percentage of the purchase price you pay upfront. A larger down payment reduces your loan amount and monthly mortgage payment, but requires more initial capital.
- Interest rate (%) is the annual percentage rate (APR) for your mortgage loan. This directly affects your monthly mortgage payment and total interest paid over the life of the loan.
- Mortgage term (years) is the length of your mortgage term. Common terms are 15, 20, or 30 years. Longer terms reduce monthly payments but increase total interest paid.
- Closing costs are one-time fees paid at purchase, including title insurance, appraisal, legal fees, and lender fees. These are typically 2-5% of the purchase price.
- Rehab costs are upfront renovation or repair costs needed before renting the property. These are added to your total cash investment.
Rental income
- Monthly rent is the expected monthly rental income. This is multiplied by 12 to get annual gross rental income, which is the starting point for all income calculations.
- Vacancy rate (%) is the expected percentage of time the property will be vacant. This accounts for periods between tenants and is deducted from gross rental income.
- Rent annual increase (%) is the expected yearly rent growth over your holding period.
Operating expenses
- Property management fee (%) is the annual fee charged by a property management company, typically 8-12% of gross rental income. This is calculated on gross rent, not after vacancy.
- Property taxes (annual) is the annual property tax amount. Property taxes vary significantly by location, typically ranging from 0.5% to 2% of property value annually.
- Insurance (annual) is the annual property insurance cost, including landlord insurance. This typically ranges from $1,000 to $3,000 annually depending on property value and location.
- HOA fees (annual) are annual homeowners association fees, if applicable. Not all properties have HOA fees, but they can be significant in condominiums and planned communities.
- Maintenance (annual) includes annual maintenance and repair costs. A common rule of thumb is 1-2% of property value annually, but this varies based on property age and condition.
- Other expenses (annual) includes miscellaneous operating expenses such as utilities (if paid by landlord), landscaping, advertising, legal fees, and other costs.
- Expense annual increases (%) allow you to model how expenses grow over time. Most expenses increase with inflation, typically 2-3% annually, though some may grow faster.
Exit strategy
- Holding length (years) is how long you plan to own the property before selling. This affects total cash flow, mortgage paydown, and appreciation.
- Sale price is your estimated sale price when you exit the investment. This should reflect expected property appreciation over your holding period.
- Sale expenses (%) includes real estate agent commissions (typically 5-6%), closing costs, transfer taxes, and other transaction fees. Total sale expenses are usually 6-10% of sale price.
How this calculator works
This calculator performs a comprehensive financial analysis of a rental property investment. It calculates first-year cash flow, projects performance over your holding period, and determines your total return including property appreciation.
The calculator starts by determining your upfront cash investment (down payment + closing costs + rehab costs) and your mortgage details. It then calculates first-year income and expenses to determine net operating income (NOI) and cash flow.
For each year of your holding period, the calculator projects rental income growth and expense escalation. It tracks annual cash flow, mortgage payments, and remaining loan balance. At the end of the holding period, it calculates sale proceeds after paying off the remaining mortgage and sale expenses.
Key metrics calculated include:
- Cap Rate (Capitalization Rate) – Year 1 NOI divided by purchase price. This measures the property's income yield independent of financing. Higher cap rates indicate better income potential.
- Cash-on-Cash Return – Year 1 cash flow divided by total cash invested upfront. This shows your return on actual cash invested, accounting for financing. A good cash-on-cash return is typically 8% or higher.
- IRR (Internal Rate of Return) – The annualized return rate that makes the net present value of all cash flows (including sale proceeds) equal to zero. IRR accounts for the timing of cash flows and is a key metric for comparing investments.
- Total Profit After Sale – The sum of all cash flows during the holding period plus net sale proceeds, minus your initial cash investment. This is your total profit from the investment.
Factors that affect returns
- Rent-to-price ratio – Higher monthly rent relative to purchase price increases cash flow and returns. Properties in high-demand rental markets often have better rent-to-price ratios.
- Operating expenses – Lower operating expenses (property taxes, insurance, maintenance) increase cash flow. Location, property condition, and local regulations significantly impact these costs.
- Financing terms – Lower interest rates and longer loan terms reduce monthly payments, improving cash flow. A larger down payment reduces leverage but may improve returns if the property appreciates.
- Property appreciation – Property value growth over time significantly impacts total returns and IRR. Even properties with modest cash flow can be excellent investments if appreciation is strong.
- Vacancy rate – Lower vacancy rates mean more consistent income. Properties in desirable locations with strong rental demand typically have lower vacancy rates.
- Holding period – Longer holding periods allow for more mortgage paydown, more years of cash flow, and more time for appreciation. However, they also increase exposure to market risks.
Factors that affect Results
- Purchase price & financing – Higher prices and interest rates reduce cash flow.
- Rental income – Higher rent improves returns.
- Operating expenses – Taxes, maintenance, and management reduce profitability.
- Vacancy – Increased vacancy lowers effective income.
- Exit price – Higher sale prices can significantly improve IRR.
Key assumptions & limitations
- Fixed loan terms – Mortgage rate and term are assumed constant.
- Predictable rent growth – Rent increases follow your inputs.
- No tax benefits included – Depreciation and tax deductions are excluded.
- Market conditions ignored – Appreciation and market risk are not modeled.
- Estimates only – Results are illustrative, not financial advice.