Rental Property Calculator: Cash Flow and Cash-on-Cash Return After the Mortgage
Enter the price, the loan, the rent and the running costs to see the first year's net operating income, mortgage payment, cash flow and return on the cash you put in.
Take a $300,000 rental bought with 20% down at 7% for 30 years and $6,000 of closing costs, renting for $2,700 a month with 5% vacancy, $3,600 of property tax, $1,500 of insurance and $400 a month of other costs. Net operating income is $20,880, a 6.96% cap rate. The mortgage takes $1,596.73 a month, leaving $143.27 a month of cash flow, a 2.60% cash-on-cash return on the $66,000 put in.
This page gives a pre-tax, first-year estimate from the figures you type in; it is not financial advice, and not tax or investment advice. It counts no depreciation, rent increases, change in the home's value, principal paid down, private mortgage insurance or one-off repairs. Confirm the loan terms and expense figures with your lender before relying on this estimate.
Other costs: maintenance, property management, HOA dues and anything else you pay every month.
Monthly cash flow, first year
$143.27
$1,719.24 a year | cash-on-cash return 2.60% | cap rate 6.96%
- Gross rent
- $32,400.00
- Vacancy loss
- -$1,620.00
- Operating expenses
- -$9,900.00
- Net operating income (NOI)
- $20,880.00
- Mortgage payment ($1,596.73 a month)
- -$19,160.76
- Cash flow
- $1,719.24
- Cash invested (down $60,000.00 + closing)
- $66,000.00
Before income tax. Leaves out rent growth, appreciation, loan paydown and depreciation.
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About the Rental Property Calculator
A rental is judged in two steps. First the property on its own: a year of rent, minus the share lost to empty months, minus taxes, insurance and running costs, gives net operating income (NOI). Divided by the price, that is the cap rate, which compares buildings regardless of how they are paid for. Then the deal as you would finance it: the mortgage payment comes out of NOI, and what remains is your cash flow. Dividing a year of cash flow by the cash you actually put in, the down payment plus closing costs, gives the cash-on-cash return. At the defaults the cap rate is 6.96% but the cash-on-cash return is 2.60%: the building yields less than the 7% loan costs, so borrowing lowers the return. Drop the rent to $2,400 and the same purchase loses $141.73 a month. These are first-year, pre-tax figures: they leave out rent increases, appreciation, the principal you pay down and depreciation.
Frequently asked questions
What is the difference between cap rate and cash-on-cash return?+
Cap rate is NOI over the price, as if you paid cash, so it describes the property. Cash-on-cash return is the cash flow left after the mortgage over the cash you invested, so it describes your deal. With the defaults, 6.96% against 2.60%: the loan's 7% rate is above what the building earns, so borrowing drags the return down.
What goes in other costs per month?+
Everything you pay to run the place that is not property tax, insurance or the mortgage: repairs and upkeep, a property manager's fee, HOA dues, utilities you cover, lawn care. Mortgage payments are never an operating cost here, which is why NOI and the cap rate stay the same whatever loan you choose.
How much does $300 of rent change the cash flow?+
Because the mortgage and most costs stay fixed. Moving the default rent from $2,700 to $2,400 cuts $300 a month of rent, and after the 5% vacancy allowance that is $285 a month less NOI, which turns $143.27 of monthly cash flow into a loss of $141.73.
Is vacancy a percent of rent or a number of months?+
A percent of a full year's rent. At 5% vacancy, $32,400 of rent loses $1,620 a year; one empty month is close to 8.33%. Enter the share you expect, based on how long units like yours sit between tenants.
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