Calculate your rental property's monthly cash flow, annual cap rate, and cash-on-cash return from purchase price through every expense line.
The Zillow listing says $1,900 rent and you've already done the math in your head: mortgage is $1,350, so that's $550 a month, easy. Then you remember property tax. And insurance. And the vacancy month between tenants. And the water heater that's going to die in year three. The $550 becomes $185, and $185 is the difference between a rental that pays you and one that quietly drains your savings every time a tenant moves out. This calculator runs the whole stack so you find that number before you sign, not after.
Enter purchase price, down payment, mortgage rate and term, rent, vacancy, property tax, insurance, HOA, maintenance reserve, management percentage, and any other monthly cost. It hands you the three numbers that actually decide the deal — monthly cash flow, cap rate, and cash-on-cash return — for a specific property you can see and walk, not a market abstraction.
Cash flow: the number that determines whether you sleep well
Monthly cash flow is effective gross rent (adjusted for vacancy) minus all monthly expenses: mortgage payment, property tax, insurance, HOA, maintenance reserve, property management fee, and other costs. A property collecting $1,900 in rent with a 5% vacancy rate generates effective rent of $1,805. If total monthly expenses run $1,620, monthly cash flow is $185 — positive, but thin.
The Vacancy Rate input is the first adjustment. Industry guidance suggests 5–8% for long-term rentals in typical markets; short-term rentals and markets with higher tenant turnover may run 10–15%. Entering 0% vacancy produces an optimistic model that assumes zero downtime between tenants — a figure few landlords actually sustain over a 5-year ownership period. Use a realistic number, not the best-case.
Maintenance Reserve (%) is the second input that most models skip. At 5–10% of monthly rent, it represents the cash set-aside for the HVAC unit, water heater, and roof that will eventually need replacing. A property that shows $320 in monthly cash flow before the reserve but $155 after it is still cash flow positive — but the $155 is what you can actually count on over the long run, not the $320.
Cap rate: what the property earns independent of your financing
Cap rate (capitalization rate) is net operating income divided by purchase price. It measures the property's income yield independent of how you financed it — useful for comparing two properties with different debt structures or for evaluating whether a property is priced correctly for the market. A property generating $18,000 in net operating income purchased at $300,000 has a 6% cap rate.
Net operating income is effective gross rent minus all operating expenses excluding mortgage payments. The calculator separates operating expenses from debt service to produce both cap rate (pre-debt) and cash-on-cash return (post-debt) metrics. This is the correct accounting. Comparing cap rate across properties is meaningful; comparing cash flow across properties with different leverage levels is not, without knowing the financing structure.
Cap rates vary by market and property type. Single-family rentals in competitive suburban markets often trade at 4–6% cap rates. Multifamily properties in secondary markets may offer 6–8%. High-risk markets or older properties sometimes yield 8–10%. Entering the purchase price you are considering and the property's operating income produces the cap rate the market is effectively pricing the asset at.
Cash-on-cash return: the yield on your actual investment
Cash-on-cash return is annual cash flow divided by total cash invested. Total cash invested is the down payment plus closing costs. A property producing $2,220 in annual cash flow on a $50,000 cash investment (down payment plus closing costs) generates a 4.4% cash-on-cash return. At $4,800 annual cash flow, the same investment returns 9.6%.
Cash-on-cash return is the metric that shows whether leverage is working for you. If you can buy a property with a 20% down payment and earn a 7% cash-on-cash return, you are earning more per dollar of capital than you might in a bond portfolio. If cash-on-cash is 2%, the leverage is not amplifying return enough to justify the illiquidity and management burden.
The Loan Term (years) input affects both monthly mortgage payment and the paydown rate of principal. A 30-year term produces lower monthly payments and thus higher cash flow per dollar of rent. A 15-year term builds equity faster but reduces monthly cash flow substantially. Comparing 15-year and 30-year structures in the calculator shows the cash flow versus equity trade-off directly.
Property management: the cost of passive income
Property Management (%) converts the cost of professional management into a monthly dollar figure. At 8–12% of collected rent, property management on a $1,900 monthly rent property costs $152–$228 per month — $1,824–$2,736 annually. Over a 5-year hold, that is $9,000–$13,700 in management fees, a cost that must be weighed against the time and expertise savings.
Self-managed properties show better cash flow in the model, but the labor cost is real even if it is not a cash outflow. If you spend 3 hours per month managing a property and value your time at $60 per hour, the implicit management cost is $180 per month — close to what a professional manager charges. The decision between self-management and professional management is financial at that margin.
For investors modeling a portfolio that will eventually require professional management — whether because of scale or because of personal time constraints — running the calculator with a management fee produces the honest long-run cash flow. Building a business plan around self-management economics creates a model that breaks when your time constraints change.
Running multiple scenarios before you buy
The most valuable use of this calculator is running three scenarios before making an offer: a conservative scenario with 8% vacancy, 10% maintenance reserve, full management fee, and a lower rent estimate; a base scenario with 5% vacancy, 7% maintenance, and your market's going rent; and an optimistic scenario with 3% vacancy and the higher end of the rent range. The gap between conservative and optimistic cash flow tells you how sensitive the deal is to assumptions.
If the conservative scenario produces negative cash flow, the property is fragile — one bad tenant year or an unexpected repair can wipe out multiple years of gains. If even the conservative scenario produces positive cash flow above $200 per month, you have a margin of safety. Know your conservative cash flow number before you make an offer. The worst investment decisions in real estate come from running only the optimistic model. Save the conservative, base, and optimistic runs free — three saved scenarios is your due diligence file before the closing table.
How to use it
- Enter Purchase Price, Down Payment (%), Mortgage Rate (%), and Loan Term to build the debt structure.
- Set Monthly Rent and Vacancy Rate to establish effective gross rent.
- Fill in Property Tax, Insurance, HOA, Maintenance Reserve, and Property Management percentage as monthly inputs.
- Add Other Monthly Expenses for anything not covered by the above categories.
- Read monthly cash flow, annual cap rate, and cash-on-cash return, then adjust inputs to model conservative and optimistic scenarios.
Who it's for
- First-time rental property investor evaluating a specific property — Enters a $285,000 duplex with $1,550 per unit rent at 5% vacancy and 8% management to see whether the 25% down payment generates positive cash flow.
- Experienced investor comparing two properties at different price points — Runs both properties through the calculator and compares cap rate and cash-on-cash return to identify which deal is priced more attractively.
- Self-managing landlord evaluating professional management — Adds a 10% management fee and checks how much monthly cash flow it removes before deciding whether the time savings justify the cost.
- Investor stress-testing a deal at higher vacancy — Raises vacancy from 5% to 12% to model the impact of a prolonged vacancy period or a difficult tenant situation on annual cash flow.
- Portfolio investor evaluating a value-add property — Enters current rent, calculates current cap rate, then increases rent by $300 to model the after-rehab cap rate and decide whether the renovation investment pencils out.
Key terms
- Cap rate
- Net operating income divided by purchase price — a property's income yield before financing costs, used to compare deals across different debt structures.
- Cash-on-cash return
- Annual cash flow divided by total cash invested — the actual yield on the money you put into the deal.
- Net operating income (NOI)
- Effective gross rent minus all operating expenses, excluding mortgage payments.
- Vacancy rate
- The percentage of time a rental unit is unoccupied and not generating rent, either between tenants or during a lease default.
Frequently asked questions
What is a good cap rate for a rental property?
Cap rate benchmarks vary by market and asset type. In high-demand, low-risk markets (coastal cities), 4–5% cap rates are common because buyers accept lower yields for appreciation and stability. In secondary markets, 6–8% is typical. Rural or high-risk properties may offer 8–12%. Compare the cap rate against alternative investments and against comparable properties in the same market.
Should I include principal paydown in cash-on-cash return?
Cash-on-cash return is calculated strictly on cash in versus cash out — it does not include principal paydown or appreciation. These are captured separately as equity accumulation. Mixing them would conflate cash yield with paper wealth, which makes cash flow planning unreliable. Track them separately.
What vacancy rate should I enter for a long-term rental?
The traditional guideline is 5% for stable markets. Markets with high tenant turnover, seasonality, or economic volatility may warrant 8–10%. If the property you are evaluating is already tenanted with a strong track record, 3–5% is reasonable. If it is currently vacant or in a soft market, model conservatively at 8%.
How do I handle closing costs in the cash-on-cash calculation?
Cash-on-cash return divides annual cash flow by total cash invested, which should include closing costs in addition to the down payment. If your down payment is $60,000 and closing costs are $4,500, your total cash investment is $64,500. The calculator uses down payment as the denominator — add closing costs to the down payment figure for a more precise cash-on-cash calculation.
What maintenance reserve percentage is appropriate?
For a single-family home in good condition, 5–7% of monthly rent is a reasonable reserve. For an older property with aging systems, 8–10% is more prudent. The actual maintenance you will face is lumpy — nothing for 3 years, then a $9,000 HVAC replacement. The percentage reserve smooths that into a monthly figure the model can use.