Rental Property Calculator
$0.00 monthly cash flow
Cap Rate vs. Cash-on-Cash Return
These two numbers answer different questions. Cap rate (net operating income divided by purchase price) measures how the property performs as if bought in cash, which makes it useful for comparing properties regardless of financing. Cash-on-cash return (annual cash flow divided by actual cash invested) measures the return on the money you personally put in, so it accounts for leverage and will usually look more favorable when you use a mortgage. This calculator assumes financing costs and taxes are not deducted from cash flow here — check the assumptions below.
What This Calculator Assumes
Net operating income (NOI) is calculated before mortgage payments, following standard real estate convention, since NOI is meant to reflect the property's own performance independent of financing. Cash flow, however, is calculated after the mortgage payment, since that's the number that actually lands in your pocket each month. Maintenance and property management are modeled as a percentage of collected rent, which is a common simplification — real repair costs are lumpy and vary heavily by property age and condition, so treat that line as a long-run average, not a monthly guarantee. Total cash invested includes your down payment, closing costs, and any upfront repair or setup costs.
The 1% Rule Is a Screening Tool, Not a Verdict
The classic "1% rule" says monthly rent should be at least 1% of the purchase price for a property to be worth a closer look. It's a fast filter for shortlisting deals, not a substitute for the fuller cash flow and cap rate math above — plenty of solid properties in expensive markets fall short of it. If you're comparing this purchase against continuing to rent, the rent vs. buy calculator can help. For a deeper look at just the loan itself, including a full amortization schedule, try the mortgage calculator.
Frequently Asked Questions
Should I use NOI or cash flow to compare two rental properties?
Use cap rate (based on NOI) when comparing properties independent of financing, since it shows how the property itself performs regardless of your loan terms. Use cash-on-cash return when you want to know how hard your actual invested dollars are working, since it factors in your mortgage payment and down payment size.
Why is my cash flow different from my net operating income?
NOI is calculated before the mortgage payment is subtracted, which is standard in real estate analysis because it reflects the property's performance independent of how it's financed. Cash flow subtracts the mortgage payment from NOI, giving you the actual amount left in your pocket each month.