Rental Property Calculator
Full rental property analysis: NOI, cap rate, mortgage, cash flow, cash-on-cash return, depreciation tax shield (27.5 years), principal paydown, appreciation, total first-year return, 1% and 50% rule checks and a 5-year projection.
| Effective gross income | — |
|---|---|
| Operating expenses | — |
| Net operating income (NOI) | — |
| Cap rate | — |
| Mortgage payment | — |
| Cash flow | — |
| Cash invested | — |
| Cash-on-cash return | — |
| Depreciation tax shield | — |
| Principal paydown (year 1) | — |
| Total return year 1 (cash flow + paydown + appreciation + tax) | — |
| 1% rule / 50% rule check | — |
| Rent needed for $200 a month cash flow | — |
| 5-year projection | — |
In short
Judge a rental by net operating income (rent less vacancy and operating costs, before the mortgage), cap rate (NOI ÷ price — 4–6% is typical for good single-family markets) and cash-on-cash return (cash flow after the mortgage ÷ cash invested). Add principal paydown, appreciation and the depreciation tax shield (building ÷ 27.5 years) for total return; at 2025–26 rates a cap rate below the loan rate means negative leverage and thin cash flow.
Who this is for: US buy-and-hold investors analysing a single-family or small multifamily deal.
Reading the numbers
- NOI = rent + other income − vacancy − operating expenses (not the mortgage). Cap rate = NOI ÷ price: 4–6% is typical for single-family rentals in good areas, 7–10% in higher-risk or cheaper markets.
- Cash-on-cash = annual cash flow after the mortgage ÷ cash invested. Many investors target 8%+; at 2025–26 rates 3–6% is common.
- Hidden returns: the tenant pays down principal, the property (usually) appreciates, and depreciation shelters cash flow from tax — the total return is often 2–3× the cash-on-cash figure.
- Rules of thumb: the 1% rule (monthly rent ≥ 1% of price) rarely holds in 2026; the 50% rule (expenses ≈ half of gross rent) is a useful sanity check against optimistic pro-formas.
- Budget reserves: 5–10% for repairs, 5% for capex (roof, HVAC, water heater), 5–8% vacancy, 8–10% management if you will not self-manage.
See also: DSCR Loan Calculator.
Assumptions
- EGI = (rent + other) × 12 − vacancy; opex = tax + insurance + repairs, capex and management % of rent + other; NOI = EGI − opex.
- Cash flow = NOI − 12 × P&I; cash invested = down + closing; depreciation = (price × (1 − land %)) ÷ 27.5.
- Total return = cash flow + year-1 principal paydown + appreciation ± tax effect of (NOI − interest − depreciation) at the marginal rate; projection holds expenses flat.
Worked example
Effective gross income $29,640; operating expenses $11,652 (39%); NOI $17,988 — a 6.00% cap rate, below the 7% loan rate (negative leverage). Mortgage $1,497 a month ($17,962 a year) leaves cash flow of just $25 a year. Cash invested $84,000 → cash-on-cash 0.03%. But principal paydown is $2,286, appreciation $9,000, and depreciation of $8,727 creates a paper loss of about $6,400 worth $1,540 at 24% — a total first-year return of about $12,850, or 15.3% on cash. Rent of about $2,867 would be needed for $200 a month of cash flow.
Frequently asked questions
What is a good cap rate for a rental property?
4–6% in stable, low-risk markets; 7–10% where prices are lower and risk higher. Compare with the mortgage rate — a cap rate below it means the loan reduces your return.
What is a good cash-on-cash return?
8–12% was the traditional target; at 2025–26 rates many investors accept 4–6% in exchange for appreciation, paydown and tax benefits.
How does depreciation help?
You deduct the building (not land) over 27.5 years — about 2.9% of the building value a year — which often turns positive cash flow into a tax loss. It is recaptured at up to 25% on sale unless you 1031 exchange.
Does the 1% rule still work?
Rarely in 2026: a $300,000 house would need $3,000 rent. Use cap rate and cash-on-cash instead; the 1% rule mostly holds in low-price Midwest and Southern markets.
What is the 2% rule?
A stricter version of the 1% rule (monthly rent ≥ 2% of price) that only holds in very low-price markets; most investors use cap rate and cash-on-cash instead.
Should I include my own labour in expenses?
Yes — budget management at market rates even if you self-manage, so the deal still works if you stop.
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