How the math works
This estimator uses the standard rental formulas — the same ones an underwriter would check first. Nothing is annualized or smoothed to make a deal look better.
Cash flow = Effective income − Operating expenses − Mortgage (P&I)
NOI = Effective income − Operating expenses · Cap rate = Annual NOI ÷ Price
Cash-on-cash = Annual cash flow ÷ Total cash invested
What counts as an operating expense?
- Property taxes and landlord insurance
- Vacancy allowance — rent you will not collect while a unit sits empty or a tenant pays late
- Repairs, maintenance and a reserve for big items (roof, HVAC, water heater)
- Property management, HOA dues, and any utilities you pay
The mortgage is not an operating expense — that is why NOI is shown before the mortgage, and cash flow is shown after it. Mixing the two is the most common way rental numbers get overstated.
How to read your result
Cash flow
Positive is necessary, not sufficient. A deal cash-flowing $80/mo on $60,000 invested is working much harder for much less than the headline suggests — check cash-on-cash next.
Cap rate
Lets you compare properties without the loan distorting the picture. Higher is not automatically better: very high cap rates often mean cheaper areas, older buildings, or higher risk and turnover.
Cash-on-cash return
Your return on the actual cash you put in. Many long-term investors look for roughly 8–12% as a healthy target, but the right bar depends on appreciation, loan paydown and your market — treat any single threshold as a guide, not a rule.
Before you offer
- Verify taxes and insurance with real quotes — estimates here are placeholders for your deal.
- Confirm rent with comparable leased units, not just asking rents.
- Add a capital-expenditure reserve for older roofs, systems and appliances.
Common questions
What is a good monthly cash flow for a rental property?
There is no universal number. Investors often cite $100–$300 per door per month as a starting screen, but $200/mo on a $15,000 investment is very different from $200/mo on $100,000 invested. Always read cash flow together with cash-on-cash return and the cash you had to put in.
Should I include vacancy and management if I manage it myself?
For an honest comparison, yes. Vacancy happens even with great tenants, and including a management allowance values your time and keeps the deal comparable if you later hire a manager or sell to an investor who will.
Does this include appreciation, loan paydown or taxes?
No — deliberately. This page estimates operating cash flow, cap rate and cash-on-cash only. Appreciation, principal paydown, depreciation and your personal tax situation are real parts of total return, but they need a separate, longer-horizon model and your own tax advice.
Why is my cap rate different from a listing's cap rate?
Listings often use pro-forma (ideal) rent and skip vacancy, management or reserves. Re-run the same property here with full expenses and you will usually get a lower — and more realistic — cap rate.
I already know my mortgage payment — do I need the loan details?
No. Under "Mortgage payment" in the form, choose "Enter payment directly" and type the principal & interest from your loan statement or lender quote. Use principal & interest only — taxes and insurance are separate lines in this estimator, so leave the escrow portion out to avoid counting them twice. Price and down payment are still used for cap rate and cash-on-cash, since those measure the return on the deal and the cash you put in.
How do I calculate rental property cash flow?
Monthly cash flow equals net operating income minus the monthly mortgage payment. Net operating income is monthly rent plus other income minus operating expenses: property taxes, insurance, HOA dues, utilities, vacancy, repairs, capital-expenditure reserve and property management. This calculator does the full calculation instantly.
What is a good cash-on-cash return for a rental property?
This calculator treats an 8–12% cash-on-cash return as a healthy range. Below that the deal is thin or marginal, and a negative return means the property costs money every month.
What is the break-even rent?
The monthly rent needed for the property to break even, with zero cash flow. In the default example the break-even rent is $2,669 per month, while the rent entered is $2,100 per month, which is why the deal shows negative cash flow.
How is cap rate calculated?
Cap rate is net operating income divided by the purchase price. In the default example, $1,117 of monthly NOI on a $285,000 purchase price gives a 4.70% cap rate.
