Rental Property Calculator
NOI, cap rate, monthly cash flow, and cash-on-cash return — the four numbers that tell you whether a rental deal actually works.
Property & financing
Taxes, insurance, maintenance, and property management combined.
Monthly Cash Flow
$183/mo
= NOI − Mortgage payment
- CCopy result
- DDownload PDF
- SSave this calculation
- HToggle history
- ?Show this panel
- EscClose open panel
Disabled while typing in a field.
Last updated: August 6, 2026 · Reviewed by the DoCalc team
What Makes a Rental Property a Good Investment?
A rental property's headline price and rent numbers can make it look profitable on the surface while hiding whether it actually generates cash. Real estate investors lean on four specific metrics — NOI, cap rate, cash flow, and cash-on-cash return — because together they separate a property's raw earning power from how financing decisions affect the actual money in your pocket each month.
The Formulas
NOI is what the property earns before financing — the same whether you paid cash or took a large loan. Cap rate expresses NOI as a yield on the purchase price, letting you compare properties independent of how they're financed. Cash flow brings the mortgage payment back in, showing actual monthly profit (or loss) after debt service. Cash-on-cash return measures that cash flow against only the money you personally put in — the down payment — which is often the number that matters most to an investor using leverage.
Worked Example
A $300,000 property, 25% down ($75,000), financed at 7% over 30 years, renting for $2,400/month with 5% vacancy and $600/month operating expenses:
This deal is cash-flow positive but modestly so — a 6.72% cap rate is solid, but the cash-on-cash return of under 3% reflects how much of the NOI is absorbed by debt service on a fairly leveraged purchase (75% loan-to-value). A larger down payment would lower cash-on-cash further in percentage terms even as monthly cash flow improved, since less leverage means the return has to work harder for the extra cash tied up.
Reading the Four Metrics Together
| Metric | What it tells you | Ignores financing? |
|---|---|---|
| NOI | The property's raw operating profit | Yes |
| Cap rate | Yield on the full purchase price | Yes |
| Cash flow | Actual monthly profit after the mortgage | No |
| Cash-on-cash return | Yield on your actual invested cash | No |
Who Should Use This Calculator
Use it if you're evaluating a specific rental property listing and want to quickly sanity-check whether the numbers support the asking price before spending time on a deeper analysis.
Go deeper if a property clears this first screen — a full underwriting should also account for closing costs in your cash-invested figure, a capital expenditure reserve for major repairs, and realistic rent growth assumptions over your hold period.
Common Mistakes to Avoid
The most common mistake is using gross rent instead of effective rent (after vacancy) when judging a deal — a property that looks profitable at 100% occupancy can turn cash-flow negative once a realistic vacancy rate is applied. A second mistake is comparing cap rates across very different markets as if they mean the same thing — a 6% cap rate is often considered strong in a high-appreciation coastal market and mediocre in a slower-growth market where investors expect higher cap rates to compensate for lower appreciation potential.
Worth knowing: a property with an attractive cap rate but negative or thin cash flow is fundamentally a bet on either lowering your financing cost (a bigger down payment, a better rate) or on future appreciation and rent growth — not a property generating meaningful cash today.
Expert Recommendation
Before making an offer, stress-test the numbers with a higher vacancy rate (8-10%) and a maintenance reserve added to operating expenses — a deal that still cash-flows positive under those more conservative assumptions has real margin for the unexpected costs every rental property eventually has.
Frequently Asked Questions
What is cap rate?
Cap rate (capitalization rate) is a property's annual net operating income divided by its purchase price, expressed as a percentage. It measures a property's return independent of financing, useful for comparing properties bought with different down payments or loan terms.
What is cash-on-cash return?
Cash-on-cash return is annual pre-tax cash flow divided by the actual cash you invested (typically the down payment plus closing costs). Unlike cap rate, it accounts for financing — it measures the return on the cash you actually put in, not the full property value.
What counts as NOI?
Net Operating Income is rental income minus operating expenses — property taxes, insurance, maintenance, property management, and vacancy loss — but before mortgage payments and income taxes. NOI measures the property's own performance, independent of how it's financed.
What's a good cap rate?
It varies significantly by market — cap rates in the 4-6% range are common in expensive, high-demand metro areas, while 8-12%+ is more typical in lower-cost markets with higher perceived risk. Compare a property's cap rate to similar properties in the same local market, not a single national benchmark.
Why would cash flow be negative even with a decent cap rate?
Cap rate ignores financing entirely, while cash flow subtracts the actual mortgage payment. A property can have a healthy cap rate but still run negative monthly cash flow if it's financed with a large loan at a high interest rate — the debt service simply exceeds NOI.
Does this calculator account for property appreciation?
No — this calculator focuses purely on operating cash flow and yield, not price appreciation. Appreciation is real but speculative and market-dependent, so many investors evaluate a deal on cash flow and cap rate alone before layering in appreciation assumptions.
What vacancy rate should I use?
5-8% is a common planning assumption for stable rental markets, representing roughly 2-4 weeks of vacancy per year between tenants. Higher-turnover property types (student housing, short-term rentals) often warrant a higher assumption.
Conclusion
No single number tells the whole story on a rental property — a great cap rate with negative cash flow is a different bet than a modest cap rate with strong cash-on-cash return. Checking all four metrics together turns a listing's asking price and rent estimate into an actual investment decision.