Analyze rental property cash flow, cap rate, and cash-on-cash return. Includes vacancy rate, maintenance costs, property management fees, and annual appreciation.
Cash flow, cap rate & cash-on-cash return
A rental property cash flow calculator forces you to look at real-world expenses that too many first-time landlords underestimate. Gross rental income is just the starting point. Subtract vacancy (typically 5%–8% of gross rent), property management (8%–12% of rent if you hire a manager), insurance ($1,200–$2,000/year), property taxes (1%–2% of value), maintenance (budget 1% of property value annually), and then the mortgage payment. What's left is monthly cash flow — and for many properties in competitive US markets, that number is surprisingly thin or even negative on day one.
Serious real estate investors use multiple metrics together. Cap rate — Net Operating Income divided by purchase price — tells you the property's income yield before financing and is typically 4%–6% in major US metros. Cash-on-cash return compares annual pre-tax cash flow to actual cash invested (down payment + closing costs), making it the most direct measure of your real return on invested dollars. The 1% rule — monthly rent should equal at least 1% of purchase price — is a quick filter for cash flow potential. A $300,000 property that rents for $2,000/month barely passes (0.67%), while one renting for $3,000/month clears the threshold easily.
Positive monthly cash flow after all expenses provides a financial cushion for repairs, vacancies, and emergencies. Many experienced investors won't buy a property unless it generates at least $100–$200/month positive cash flow from day one.
Cap rate = NOI / Property Value. A $300,000 property with $18,000 annual NOI has a 6% cap rate. Higher cap rates suggest better income yield (and often higher risk markets). Major coastal cities often see 3%–4% cap rates.
If you put $75,000 down and net $6,000/year after all expenses and mortgage, your cash-on-cash return is 8%. This metric directly compares rental income to your cash investment — important for comparing deals across different price points.
Monthly rent should be at least 1% of the purchase price for positive cash flow potential. A $200,000 rental should rent for $2,000+/month. This is a quick filter — not a guarantee — but screens out obvious cash flow losers.