How the rental property calculator works
Rental analysis starts with net operating income (NOI): rent actually collected minus the costs of running the property, before the mortgage.
Cap rate = NOI ÷ Purchase price
Cash flow = NOI − Mortgage payments
Cash-on-cash = Yearly cash flow ÷ Cash invested (down payment + closing)
Cap rate measures the property's return as if bought with cash, so it lets you compare properties regardless of financing. Cash-on-cash shows the return on the money you actually put in. Investors often use the "50% rule" as a rough check that operating expenses (excluding the mortgage) run near half of rent; 35% to 45% is common for newer single-family homes. Appreciation and principal paydown add to total return but are not included.
Worked example
A $300,000 house bought with 25% down at 7% has a mortgage payment of $1,496.93. At $2,400 rent, 5% vacancy and 40% operating expenses, NOI is $15,840 a year, a 5.28% cap rate. After the mortgage, cash flow is about −$177 a month, so the property does not pay for itself at these numbers. At 6% interest, cash flow would be about −$29 a month.
Frequently asked questions
What is a good cap rate?
It depends on the market and risk. Many residential markets trade between about 4% and 8%.
What is cash-on-cash return?
Yearly pre-tax cash flow divided by the cash you invested.
What is the 1% rule?
A quick screen that monthly rent should be at least 1% of the purchase price. It is a filter, not an analysis.
Is negative cash flow always bad?
It means you pay out of pocket each month. Some investors accept it for appreciation, but it adds risk.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.