Enter the purchase, the loan, the rent, and the expenses. See whether the property cash flows each month and the return on the cash you put in.
How this is calculated Embed on your siteUpdated October 2026
A rental can look profitable until vacancy, expenses and the mortgage are all counted. This calculator works through those in order and reports the three numbers investors check first: monthly cash flow, cap rate and cash-on-cash return. With the defaults, a $300,000 property bought with 25% down at 7%, renting for $2,400 with 5% vacancy and $700 a month of expenses, earns a 6.32% cap rate but only $83 a month of cash flow, a 1.3% cash-on-cash return.
Borrowing helps a rental's return only when the property earns more than the loan costs. In the default example the cap rate (6.32%) is below the 7% mortgage rate, so every borrowed dollar earns less than it costs, and cash flow is thin. Lower the rent to $2,000 with 20% down and the cap rate falls to 4.80%: the property loses $397 a month, and you would be paying to hold it in the hope of appreciation.
When rates are high, deals that worked a few years ago often don't. Many investors today either put more down, look for properties with a higher cap rate, or accept low early cash flow and plan around rising rents and loan paydown.
Both are screening tools, not substitutes for running the real numbers.
Rental income is taxable, but you can deduct mortgage interest, expenses and depreciation. Residential buildings are depreciated over 27.5 years, which often makes a property that cash flows slightly show a tax loss. When you sell, depreciation you took is taxed back ("recaptured"). A tax professional can help you plan for both.
For the cap rate on its own, use the cap rate calculator. To include appreciation and the full return over time, try the real estate investment calculator. See the mortgage payment in detail with the mortgage calculator.
It depends on the market and property type. As a rough guide, 5% to 8% is common for single-family rentals. A cap rate above your mortgage rate means borrowing adds to your return.
Your annual cash flow after all expenses and the mortgage, divided by the cash you invested (down payment and closing costs). It shows what your actual dollars earn each year.
Start with rent, subtract vacancy, then operating expenses, then the mortgage payment. What's left is cash flow. In the default example that is $2,280 − $700 − $1,497 = $83 a month.
A screening rule that says monthly rent should be at least 1% of the purchase price for a property to likely cash flow. It is a rough filter, not a guarantee.
Not in cash flow. Appreciation can add a lot to long-run returns, but it isn't guaranteed and doesn't pay monthly bills, so most investors evaluate cash flow without it.
Cap rate = NOI ÷ price; cash-on-cash = annual cash flow ÷ cash invested (down payment only here; add closing costs for a stricter figure). Depreciation period from IRS Publication 527. Not investment or tax advice.