Rental Property Calculator
Analyze any rental property deal in seconds. Get an instant deal verdict, cap rate, cash-on-cash return, DSCR, monthly cash flow, and 10-year equity projection. Test scenarios, compare properties, and export a shareable deal analysis. Free, no login, 100% in your browser.
How to Use the Rental Property Calculator
Start by entering the purchase price, down payment percentage, mortgage rate, and loan term. Then add your expected monthly rent, vacancy rate, and operating expenses — property tax, insurance, maintenance reserve, management fee, HOA, CapEx reserve, and utilities. The calculator instantly computes your monthly cash flow, cap rate, cash-on-cash return, DSCR, and total ROI including appreciation, equity buildup, and tax benefits. Each metric updates in real time as you adjust inputs, so you can quickly see how different assumptions change the deal.
Understanding Cap Rate, CoC Return & DSCR
Cap rate (capitalization rate) measures the property’s annual net operating income as a percentage of the purchase price. It tells you the return the property generates independent of how you finance it. A 7% cap rate means the property produces $7,000 in NOI for every $100,000 of value. Higher cap rates mean higher income relative to price, but may also indicate higher-risk neighborhoods or older properties that need more maintenance.
Cash-on-cash return measures the annual cash flow you receive relative to the total cash you invested (down payment + closing costs + rehab). Unlike cap rate, CoC accounts for your financing. With leverage, your CoC return can exceed the cap rate — that’s the power of using a mortgage. A property with a 6% cap rate can deliver 10%+ CoC return with favorable financing.
DSCR (Debt Service Coverage Ratio) measures whether the property’s income covers its debt payments. DSCR = NOI ÷ Annual Mortgage Payments. A DSCR of 1.25 means the property earns 25% more than needed to cover the mortgage. Most DSCR lenders require at least 1.2. Below 1.0 means the property loses money each month after the mortgage.
The 5 Investor Rules Every Buyer Should Know
The 1% rule, popularized in Brandon Turner’s The Book on Rental Property Investing (BiggerPockets Publishing, 2015), says monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for $2,000/month minimum. The 2% ruleis the stricter version — achieving it almost guarantees strong cash flow, but it’s rare in expensive coastal markets.
The 50% rule estimates that operating expenses (excluding mortgage) will consume about 50% of your gross rental income over the long term. If your pro forma shows expenses at only 30% of rent, you’re almost certainly underestimating maintenance, vacancy, or CapEx reserves.
The Gross Rent Multiplier (GRM) is the purchase price divided by annual gross rent. A GRM below 15 is generally favorable — it means you’re paying less than 15 years’ worth of gross rent for the property. The DSCR rule requires a minimum 1.25 ratio to ensure comfortable debt coverage with margin for vacancies and repairs, which aligns with the underwriting bar used by most Fannie Mae-aligned and non-QM investor lenders.
How to Analyze a Rental Property Deal (Step by Step)
Step 1: Gather the numbers. Get the asking price, estimated rent from Zillow or Rentometer, property tax from the county assessor, insurance quotes, and the current mortgage rate for investment properties.
Step 2: Run the basic metrics. Calculate cap rate, CoC return, and monthly cash flow. Check against the 1% rule as a quick screen. If the property fails the 1% rule and has a cap rate below 5%, it’s likely a poor cash-flow play.
Step 3: Stress test. Use the What-If simulator to see what happens if vacancy increases by 5%, rent drops $200/month, or rates rise 1%. A good deal survives stress scenarios without going negative.
Step 4: Project long-term. The 10-year wealth builder chart shows how mortgage paydown, appreciation, and cumulative cash flow compound your initial investment over time. Even a property with modest monthly cash flow can build substantial equity.
Step 5: Compare and decide. Save multiple analyses to history, compare properties side-by-side, and use the Scenario A vs B panel to evaluate different financing strategies for the same property.
Tax Benefits of Rental Property Investing
Rental property offers three major tax deductions. Depreciation lets you deduct the cost of the building (not the land) over 27.5 years for residential property on a straight-line schedule, per IRS Publication 527. On a $200,000 property with a 20% land allocation, that’s $5,818/year in phantom deductions (160,000 / 27.5) that reduce taxable rental income with no cash outlay. Mortgage interest is fully deductible on investment properties — and in the early years of a 30-year loan, most of your payment is interest. Operating expenses — property tax, insurance, maintenance, management fees, repairs, and travel to the property — are all deductible. Combined, these can add roughly 2-4% to your effective return. On exit, unrecaptured Section 1250 gain is taxed at up to 25%, so run the numbers with a CPA before banking on the full benefit.
Frequently Asked Questions
What is a good cap rate for a rental property?
Market-dependent. In expensive coastal cities (San Francisco, NYC), 3-5% cap rates are common for Class A stock. In the Midwest and South, 6-10% is achievable. Broadly, 5-7% is average, 7-10% is strong, and above 10% is excellent but may signal higher risk (rougher neighborhoods, deferred maintenance, or optimistic rent assumptions).
How do you calculate cash-on-cash return?
Cash-on-cash return = (Annual Net Cash Flow / Total Cash Invested) × 100. Cash invested includes the down payment, closing costs, and any rehab. Unlike cap rate, CoC accounts for your financing, so leverage lifts it: a property with an 8% cap rate can deliver 12%+ CoC with a mortgage. Target 8-12% minimum for traditional buy-and-hold rentals.
What is the 1% rule in real estate investing?
Popularized by BiggerPockets and Brandon Turner, the 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price. A $250,000 property should rent for $2,500/month. The 2% rule is stricter and almost guarantees strong cash flow, but is rare in expensive markets. These are screens, not substitutes for full underwriting.
What is DSCR in real estate?
DSCR (Debt Service Coverage Ratio) = NOI / Annual Debt Service. A DSCR of 1.0 means the property barely covers its debt. Most DSCR lenders (Fannie Mae-aligned programs and non-QM investor products) require 1.2-1.25 minimum. A DSCR of 1.5+ gives you a buffer for unexpected vacancies or repairs. Below 1.0, the property loses money each month after the mortgage.
How do you analyze a rental property deal?
Gather purchase details, income estimates, and expenses. Calculate cap rate, cash-on-cash return, DSCR, and monthly net cash flow. Screen with the 1% and 50% rules. Project 10-year equity from amortization plus appreciation. Factor in depreciation. Finish with a stress test — what breaks the deal if vacancy jumps, rent drops, or rates rise?
What is a good cash flow for a rental property?
Most investors target $100-200/month per unit minimum after all expenses including CapEx and vacancy reserves. $300-500 is strong, $500+ is excellent. Below $100 leaves little margin for surprises. Negative cash flow is only defensible with a concrete appreciation thesis — never as a hope.
What is the 50% rule in real estate?
The 50% rule estimates that operating expenses (everything except the mortgage) will average about 50% of gross rental income over the long term, including vacancy, maintenance, repairs, management, taxes, insurance, and CapEx. Use it as a reality check — if your numbers show expenses at only 30% of rent, you’re likely underestimating. It trends conservative for stabilized Class A stock and aggressive for Class C properties that need heavier reserves.
How is rental property depreciation calculated?
Per IRS Publication 527, residential rental property is depreciated on a 27.5-year straight-line schedule. Only the building qualifies — land is never depreciable. A $200,000 property with a 20% land allocation has a $160,000 depreciable basis, producing $5,818/year in deductions. On sale, unrecaptured Section 1250 gain is taxed at up to 25%, so confirm the exit math with a CPA.