Rental Property Calculator
Before buying a rental property, you want to know whether the rent will actually cover your costs and earn a worthwhile return. This calculator turns four simple inputs — purchase price, down payment, monthly rent, and yearly running costs — into the two numbers investors lean on most: the cap rate, which measures the property's return on its full price, and the cash-on-cash return, which measures the return on the cash you actually put in. The figures are currency-agnostic; switch the symbol at the top for your market.
- Annual rent
- $24,000.00
- Net operating income
- $18,000.00
- Cap rate
- 6.00%
- Cash-on-cash return
- 30.00%
At a 6.0% cap rate, this property returns 18,000 of net operating income a year on its full price — before any mortgage. The cash-on-cash figure of 30.0% is higher because it measures that same income against only the 60,000 you put down, not the whole price.
How it works
Start with the income. Multiply the monthly rent by twelve to get the gross annual rent. From that, subtract the property's annual operating expenses — property taxes, insurance, maintenance, management, and the like — to get the net operating income, or NOI. NOI is the cash the property throws off each year from operations alone, before any loan payments.
The cap rate (capitalization rate) divides that NOI by the purchase price. It answers a clean question: if you bought this property outright with cash, what annual return would the rent produce? Because it ignores financing, the cap rate lets you compare very different properties on equal footing and is the standard yardstick for valuing income real estate.
The cash-on-cash return divides the same NOI by the cash you actually invested — here, the down payment. Because you control a whole property with only a fraction of its price down, this figure is usually higher than the cap rate. It tells you how hard your invested cash is working. Note that the cash-on-cash figure shown here is deliberately pre-mortgage for simplicity: it measures NOI against your down payment without subtracting loan payments, so it isolates the property's operating performance from the financing decision. To layer in a mortgage, run the loan separately and subtract the annual payments from NOI.
Annual rent = monthly rent × 12. Net operating income (NOI) = annual rent − annual expenses. Cap rate = NOI ÷ purchase price × 100. Cash-on-cash return = NOI ÷ down payment × 100.
Worked example
Take a property at 300,000 with 60,000 down, renting for 2,000 a month, and 6,000 a year in taxes, insurance, and upkeep. Annual rent is 2,000 × 12 = 24,000. Subtract the 6,000 of expenses and the net operating income is 18,000. The cap rate is 18,000 ÷ 300,000 = 6.0%. The cash-on-cash return is 18,000 ÷ 60,000 = 30.0% — far higher than the cap rate because it measures the income against only the cash you put in, not the whole price.
Things to watch out for
If you enter no down payment, the cash-on-cash return is shown as zero because dividing by zero is undefined — read the cap rate instead in an all-cash scenario. Be realistic with expenses: leaving out vacancy, repairs, or management inflates both returns. Remember the cap rate ignores financing entirely, and the cash-on-cash figure here is pre-mortgage; a leveraged purchase with a loan will have a different, usually lower, true cash flow once payments are deducted.
Frequently asked questions
What is a good cap rate?+
It varies by market and risk. Higher cap rates suggest more income relative to price (and often more risk or a weaker location); lower cap rates suggest a pricier, often safer asset. Compare against similar local properties rather than a universal target.
What is the difference between cap rate and cash-on-cash return?+
Cap rate measures NOI against the full purchase price, ignoring any loan. Cash-on-cash measures the same income against only the cash you invested. Leverage makes cash-on-cash higher, but it also adds mortgage payments the cap rate does not show.
Does this include my mortgage payment?+
No. The cash-on-cash figure here is deliberately pre-mortgage to isolate the property's operating return. To account for a loan, calculate the annual mortgage payment separately and subtract it from the net operating income.
What counts as an annual expense?+
Property taxes, insurance, maintenance and repairs, property management fees, HOA dues, and an allowance for vacancy. It excludes your mortgage payment, which is a financing cost rather than an operating one.
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Disclaimer: This calculator is for educational and informational purposes only and provides estimates, not financial advice. Interest rates, taxes, fees, and local rules vary and change over time. Confirm figures with a qualified professional before making any financial decision.
Last reviewed: 2026-06-22