Rental Income Calculator
See what a rental property really earns. With $2,000 rent and standard expenses, the default property makes $2,436.00 a year in cash flow and a 5.21% cap rate.
How rental income is calculated
Start with rent, subtract vacancy to get collected rent, then subtract operating costs: management, maintenance, property tax and insurance. What remains is net operating income (NOI). Subtract the mortgage payment to get cash flow.
For the default property: NOI is $15,636.00 a year, cash flow is $2,436.00 a year ($203.00 a month), the cap rate is 5.21% and the cash on cash return is 3.48%.
Key metrics
- Cap rate = annual NOI / purchase price. It compares properties regardless of financing.
- Cash on cash return = annual cash flow / cash you invested. It shows the return on your own money.
Many investors use the 1% rule as a quick screen, but expenses decide the real result. Add capital expenses such as roof and HVAC to the maintenance percentage for older homes. For return on a whole project use the ROI calculator.
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Frequently asked questions
What is a good cap rate for a rental property?
Many investors look for 5 to 10%, depending on market and risk. Lower cap rates usually mean lower risk markets.
How much should I budget for maintenance?
A common rule is 1% of the home value per year, or 5 to 10% of rent.
Does cash flow include mortgage principal?
Cash flow subtracts the full mortgage payment, even though the principal portion builds your equity.
What vacancy rate should I use?
5 to 8% is typical. Use your local data if you have it.
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