Rental Property ROI Calculator
Run the numbers on a rental before you buy. Get monthly cash flow, cap rate, cash-on-cash return, and gross yield in seconds.
A common rule of thumb is to budget 35–45% of rent for operating expenses (excluding the mortgage).
Monthly Cash Flow
+$203/mo
$2,437 per year after mortgage and operating expenses
Cap Rate
6.80%
Cash-on-Cash
3.25%
Gross Yield
9.60%
Annual NOI
$20,400
Deal Breakdown
| Down Payment (cash invested) | $75,000 |
| Loan Amount | $225,000 |
| Monthly Mortgage (P&I) | $1,497 |
| Net Operating Income (annual) | $20,400 |
| Annual Cash Flow | $2,437 |
How these rental return metrics work
Cap rate measures the property's return independent of financing. It's net operating income (NOI) divided by purchase price, where NOI = annual rent minus operating expenses (taxes, insurance, maintenance, vacancy, management) but not the mortgage. Two identical houses have the same cap rate no matter how each buyer financed them.
Cash-on-cash returndoes factor in your loan. It's annual pre-tax cash flow divided by the actual cash you put in. Leverage usually pushes cash-on-cash above the cap rate when rent comfortably covers the mortgage — that's the upside of borrowing. This simple model counts only the down payment as cash invested; in the real world, add closing costs and any upfront repairs.
Gross yield is annual rent divided by price — a quick first-glance filter, but it ignores expenses, so never lean on it alone. For a deeper walkthrough, see our rental property ROI analysis guide and the investment property mortgage guide for financing details. Don't forget to price in proper landlord insurance within your operating expenses.
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Frequently Asked Questions
What is a good cap rate for a rental property?
It depends on the market, but many investors look for a 5–10% cap rate. Lower cap rates (4–6%) are common in expensive, high-appreciation metros, while higher cap rates (8%+) usually come with more risk or slower-growth areas. Compare against similar local properties, not a national average.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores your mortgage and measures the property itself. Cash-on-cash return includes financing and measures the return on the cash you actually invested. When rent comfortably covers the loan, leverage usually makes cash-on-cash higher than the cap rate.
What should I include in operating expenses?
Property taxes, insurance, repairs and maintenance, a vacancy allowance (often 5–8% of rent), property management (8–10% if you hire it out), and any HOA dues. Leave the mortgage out of operating expenses — it's a financing cost, not an operating cost.
Is positive cash flow enough to call a deal good?
Positive cash flow is the baseline, but a strong deal also earns a competitive cash-on-cash return and leaves room for appreciation and loan paydown. A property that barely breaks even has no cushion for repairs or vacancy, so build a margin of safety into your numbers.