Rental Property Calculator | ROI & Cash Flow

Q: How does this investment property calculator work?

Enter acquisition price, financing (or cash), rent, operating expenses, and optional hold/exit assumptions. Year-one metrics: NOI, cap rate, monthly cash flow, cash-on-cash return, and DSCR. The widget flags 1% and 50% rule benchmarks, negative leverage, low maintenance reserve, and DSCR below 1.20. Section 05 adds rent/expense growth, appreciation, and estimated net sale proceeds before tax.

Q: What do the default numbers show on a $450,000 rental?

At defaults ($450,000 price, $3,000/mo rent, 20% down, 6.2% rate, taxes $5,400/yr, insurance $1,800/yr, 8% management, 10% maintenance, 5% vacancy): NOI ≈ $20,844/yr, cap rate ≈ 4.63%, monthly cash flow ≈ −$468, DSCR ≈ 0.79. The deal fails the 1% rule (0.67% of price) and shows negative leverage (rate > cap rate).

Investment property calculator: cap rate, cash flow, and DSCR

Models rental NOI, cap rate, cash-on-cash return, DSCR, 1%/50% benchmarks, and optional hold-period exit from your inputs. Illustrative only—not tax, legal, or lending advice.

What This Calculator Does

This investment property calculator evaluates a rental acquisition from your price, financing, rent roll, and operating expenses. It computes net operating income (NOI), cap rate, monthly and annual cash flow, cash-on-cash return, and debt service coverage ratio (DSCR). Benchmark cards score the 1% and 50% rules; warning strips flag negative leverage, low maintenance reserve, and DSCR under 1.20. Optional hold settings project cumulative cash flow, equity growth, and net sale proceeds before tax.

Who it helps:

Investors comparing a specific listing or pro forma who want lender-style coverage metrics beside back-of-napkin rules.
What it outputs:

Year-one NOI, cap rate, cash flow, cash-on-cash, DSCR, OpEx ratio, 1%/50% pass-fail, expense breakdown, equity chart, hold-period cash flow sum, and exit proceeds.
Limitations:

No depreciation, tax, capital gains, rent-up timelines, or tenant turnover modeling. Closing costs default to ~3% when blank. Exit proceeds are before tax.

How the Math Works

Effective rent subtracts vacancy from gross rent. Operating expenses add management and maintenance as percentages of effective rent, plus property tax and insurance dollars. NOI excludes mortgage payments:

\text{NOI} = \text{Effective rent} - \text{Operating expenses}

\text{Cap rate} = \frac{\text{NOI}}{\text{Purchase price}} \times 100

\text{Cash flow} = \text{NOI} - \text{Annual mortgage payment}

\text{Cash-on-cash} = \frac{\text{Annual cash flow}}{\text{Total cash invested}} \times 100

\text{DSCR} = \frac{\text{NOI}}{\text{Annual mortgage payment}}

Total cash invested = down payment (or full price if cash) + renovation + closing costs.

Worked example (defaults):

$450K price, $3K/mo rent, 5% vacancy, OpEx ≈ $13.4K/yr on management + maintenance + tax + insurance → NOI ≈ $20,844, cap rate 4.63%. With ~$26.5K/yr debt service, annual cash flow ≈ −$5,615 (−$468/mo), DSCR 0.79.
1% rule:

Monthly rent ÷ price. Target ≥1% ($4,500/mo on $450K). Defaults at 0.67% → Short.
50% rule:

Operating expenses ÷ gross rent. Heuristic ≤50%. Defaults at ~37% → Pass (OpEx is light, but leverage still drives negative cash flow).

How to Use This Calculator

Year-one metrics stay fixed while section 05 changes hold-period totals—adjust one block at a time when stress-testing.

Acquisition (01):

Purchase price drives cap rate denominator. Closing costs at 0 → ~3% of price added to cash invested.
Financing (02):

Loan vs cash toggle. Down payment %, APR, and term set monthly mortgage for DSCR and cash flow.
Income & OpEx (03–04):

Rent plus other income. Taxes and insurance as annual dollars; management and maintenance as % of effective rent; vacancy % applied to gross monthly income.
Projections & exit (05):

Rent/expense growth rates compound each hold year. Appreciation or target sale price sets exit; cost to sell % reduces proceeds.
Charts:

Expense pie uses monthly OpEx + mortgage + vacancy. Equity chart uses appreciation on purchase price minus remaining loan balance.

Benchmark flags and lender-style coverage

The widget surfaces quick screens beside full math. They are not underwriting standards.

1% rule card:

Pass when rent ≥1% of price. Useful for cash-flow markets; often fails in high-price/low-rent areas (as on defaults).
50% rule card:

Pass when OpEx ≤50% of gross rent. Defaults pass on OpEx but still show negative cash flow because debt service is separate.
DSCR & negative leverage:

DSCR < 1.20 triggers a low-DSCR note on financed deals. Negative leverage warns when APR exceeds cap rate—borrowed money costs more than unlevered yield.

Lender cutoffs vary; 1.20 DSCR is a common reference for investment-property loans, not a promise of approval.

Hold period, growth, and exit proceeds

Section 05 does not change year-one cap rate or DSCR; it sums annual cash flow with compounded rent/other income and growing tax/insurance, then estimates sale proceeds. Net proceeds before tax = projected sale − selling costs − remaining loan balance. Switch to target sale price when you have a concrete exit number instead of appreciation.

Defaults (10 yr, 3% growth):

Cumulative operating cash flow can stay negative while equity from appreciation and paydown still produces positive net proceeds before tax—read both panels.
Not modeled:

Depreciation schedules, 1031 exchanges, capital gains tax, or refinance events.

FAQ

How does this investment property calculator work?

Enter acquisition price, financing (or cash), rent, operating expenses, and optional hold/exit assumptions. Year-one metrics: NOI, cap rate, monthly cash flow, cash-on-cash return, and DSCR. The widget flags 1% and 50% rule benchmarks, negative leverage, low maintenance reserve, and DSCR below 1.20. Section 05 adds rent/expense growth, appreciation, and estimated net sale proceeds before tax.

What do the default numbers show on a $450,000 rental?

At defaults ($450,000 price, $3,000/mo rent, 20% down, 6.2% rate, taxes $5,400/yr, insurance $1,800/yr, 8% management, 10% maintenance, 5% vacancy): NOI ≈ $20,844/yr, cap rate ≈ 4.63%, monthly cash flow ≈ −$468, DSCR ≈ 0.79. The deal fails the 1% rule (0.67% of price) and shows negative leverage (rate > cap rate).

What is the difference between cap rate and cash-on-cash return?

Cap rate = NOI ÷ purchase price (financing ignored). Cash-on-cash = annual cash flow ÷ total cash invested (down payment + closing + renovation). On defaults, cap rate ≈ 4.63% while cash-on-cash ≈ −5.4% because the mortgage consumes more than NOI.

What is DSCR and what does this calculator use?

Debt service coverage ratio (DSCR) = NOI ÷ annual mortgage payment. Defaults: 0.79 (below the common 1.20 lender reference). The results panel marks DSCR under 1.20 when financed. Cash purchases skip mortgage debt service.

How are the 1% and 50% rules shown?

1% rule: monthly rent ÷ purchase price (target ≥1%). Defaults: 0.67% → Short. 50% rule: operating expenses ÷ gross rent (heuristic ≤50%). Defaults: OpEx ≈ 37% → Pass. Both are screening flags in the widget, not guarantees.

What counts as operating expense here?

Property tax, insurance, management (% of effective rent after vacancy), maintenance/CapEx (% of effective rent), and vacancy loss. Mortgage principal and interest are not in NOI—they sit below NOI as debt service. Closing costs default to ~3% of price when you leave the field at zero.

What does the hold-period exit panel include?

With defaults (10-year hold, 3% rent/expense/appreciation growth, 8% cost to sell, appreciation-based exit): cumulative cash flow is negative over the hold, but estimated net proceeds before tax can still be positive from sale equity. The panel excludes depreciation, capital gains tax, and recapture.

How is this different from the ROI Calculator?

This page is rental-property specific: NOI, cap rate, DSCR, 1%/50% flags, expense pie, equity chart, and hold-period exit. The ROI Calculator handles generic in/out cash flows without a rent roll or lender-style coverage metrics.

Investment Property Calculator: Rental ROI & Cash Flow

Acquisition

Financing

Income

Operating expenses

Projections & exit

Hold-period exit (before tax)

Returns snapshot

1% rule

50% rule

Negative leverage

Low DSCR

Charts

How to use this calculator

Reading the cash-flow and exit panels

Example: $450K purchase, $3K/mo rent, 20% down

NOI vs cash flow in the widget

Hold-period exit (section 05)

When warnings appear