Rental Property Calculator

The order matters more than the arithmetic. Income comes first, then vacancy, then operating expenses — and only then the mortgage. Four numbers fall out of that sequence, and each one answers a different question:

• Net operating income asks what the building earns. It is effective gross income minus operating expenses, and the mortgage is not one of them.
• Cap rate asks what the price is buying. NOI divided by purchase price, ignoring financing entirely, so a cash buyer and a leveraged buyer can compare the same deal.
• DSCR asks whether the property can pay its own loan. NOI divided by annual debt service — the ratio a lender underwrites to.
• Cash-on-cash asks what you personally earn in year one. Annual cash flow over every dollar you put in, including closing costs and rehab.

None of them is the answer on its own. A property can show a strong cap rate and still lose money every month if the loan is expensive, and it can cash-flow beautifully while being a poor use of the capital tied up in it.

Three errors show up over and over, and all three flatter the deal:

• Debt service inside NOI. It makes cap rate a function of your down payment. If a calculator shows the cap rate changing when you change the loan, it is wrong.
• No reserves. Leaving out maintenance and CapEx makes a marginal deal look healthy. Roofs last about twenty years and water heaters about ten; budgeting nothing for them does not make them free.
• Cash-on-cash on the down payment only. Ignoring closing costs and rehab shrinks the denominator. On the example above that single omission would move the reported return from 4.75% to 5.80%.

This calculator does none of those, and it shows you the substituted arithmetic so you can check rather than trust.

How do you calculate if a rental property is worth buying?

Work out net operating income first — collected rent minus every operating expense, with the mortgage left out — then divide it by the price for the cap rate and by the annual mortgage payment for DSCR. Subtract the mortgage from NOI for cash flow, and divide that by the cash you put in for cash-on-cash return. A deal that clears a 1.25 DSCR and pays a cash-on-cash return above what you can get risk-free is worth a second look.

Should the mortgage be included in net operating income?

No. NOI measures the property, not the loan. Including debt service makes the cap rate depend on how much you borrowed, so two buyers bidding on the same building would compute different cap rates — which defeats the purpose of the metric. Debt service belongs on the line below NOI, where it produces cash flow.

What expenses do people forget in a rental property calculator?

Capital expenditure reserves, property management, and vacancy. A duplex renting for $2,650 a month with 5% vacancy, 8% management and 10% combined maintenance and CapEx reserves loses $5,665 a year to those three lines alone — more than the insurance premium and close to the property tax bill.

Is a 5% cash-on-cash return good for a rental property?

It depends what else the money could do and what you are counting. Cash-on-cash ignores principal paydown, appreciation and the depreciation shield; on the worked example on this page those add roughly 12 percentage points to the year-one return. Judge cash-on-cash against Treasury yields for the cash-flow component alone, then look at total return separately.

Does this rental property calculator cost anything?

No. There is no account, no trial and no card. BiggerPockets charges $39 a month for its Pro tools and DealCheck runs $10 to $20 a month; the complete analysis and the printable deal report are free here because the site is ad-supported, and no ad is ever placed between you and the result.

Working a single metric? Go straight to the cap rate calculator, the DSCR calculator or the cash on cash return calculator. Screening quickly instead? The 1% rule and 50% rule pages test the shortcuts against this same deal, and the printable deal report puts the whole thing on one page.