HOA, other costs and incomeHOA dues, utilities you pay, parking or laundry income, appreciation
Other expenses cover utilities you pay, pest control, lawn care, accounting and anything else that recurs. Appreciation only feeds the total ROI line.
The mortgage payment is principal and interest only. Leave it at 0 for a cash purchase. Use the Full deal analysis tab before you make an offer, because these rules skip your real tax, insurance and repair figures.
See full breakdown
A rental property calculator takes the monthly rent, removes a vacancy allowance and the operating costs (tax, insurance, maintenance, management, HOA) to get net operating income, then subtracts the mortgage to leave cash flow. Cap rate is yearly NOI ÷ purchase price; cash on cash return is yearly cash flow ÷ the cash you put in. A $250,000 home renting for $2,500 with 25% down at 7.28% clears about $228 a month, a 7.3% cap rate and a 3.9% cash on cash return. As quick screens, rent should be at least 1% of the price and operating costs tend to run near 50% of rent before the mortgage.
How to calculate rental property cash flow and returns
Cash flow = rent collected minus operating costs minus the mortgage. This rental property cash flow calculator runs that first, then adds NOI, cap rate and ROI.
| Full deal analysis your real figures | Quick deal screen rules of thumb | |
|---|---|---|
| Income | Monthly rent + other income, less the vacancy rate you expect | Monthly rent + other income, with no vacancy line |
| Operating costs | Property tax + insurance + HOA + maintenance % + management % + other costs | Assumed to be half of gross income (the 50% rule) |
| NOI and cap rate | NOI = income minus operating costs; cap rate = yearly NOI ÷ purchase price | Rent compared with price: 1% and 2% a month, 7% a year |
| Cash flow and return | NOI minus mortgage; cash on cash = yearly cash flow ÷ (down payment + closing + rehab) | Half of gross income minus the mortgage payment, per door |
Worked example: a $250,000 single family rental at $2,500 a month, 25% down, 7.28% over 30 years
Same property, year one: what the $70,000 of cash you put in earned
How this rental property calculator works: the purchase price, down payment, rate and term set the loan and the monthly principal and interest. Income is cut by the vacancy rate, then tax, insurance, HOA, maintenance, management and other costs come off to give NOI; the mortgage comes off that to give cash flow. Cash invested is the down payment plus closing costs and rehab, which is what cash on cash return and the payback period are measured against. In the example, NOI of $18,129 a year gives a 7.3% cap rate. Check the payment on its own with the mortgage calculator, or compare prices across a market with the gross rent multiplier calculator.
When to use this rental property calculator
Use it any time you are weighing a rental you might buy, or checking how a property you already own is really doing.
- Before you make an offer: see whether the price leaves room for your target cash flow and cash on cash return. If the numbers only work at a rent you have never seen in that street, lower the offer or walk away.
- Refinancing or changing the rent: rerun it with the new rate, term or rent to see what happens to cash flow.
- Portfolio review: enter each door you own with the same vacancy and repair assumptions, then line up cap rate and cash on cash side by side. The weakest property is often the one with the oldest systems, not the lowest rent.
- Setting rent on a vacant unit: find the monthly rent that covers every cost and still leaves positive cash flow.
- Investor presentations and lender meetings: print the ROI and cap rate as a one page PDF, or send the link.
- Short term or vacation rentals: enter average monthly income and set vacancy to the share of nights you expect to sit empty, so a slow winter is priced in.
- Property managers pricing a takeover: show an owner what your fee does to their cash flow before they sign. A rental property cash flow calculator makes that conversation about numbers instead of opinions.
What are the 1%, 2%, 7% and 50% rules in rental property?
They are fast filters for sorting a long list of listings. Each one ignores something real, so treat a pass as "worth a closer look", not as a yes.
| Rule | What it says | On the $250,000 example |
|---|---|---|
| 1% rule | Monthly rent should be at least 1% of the purchase price after repairs. | $2,500 rent on $250,000 is exactly 1%, so it passes |
| 2% rule | A stricter version: rent of 2% or more of the price a month, on the idea that the higher the ratio, the better the cash flow. | Needs $5,000 a month, so it fails |
| 7% rule | Yearly gross rent should be at least 7% of the purchase price. It leaves out taxes, insurance, repairs and vacancy. | $30,000 a year is 12% of the price, a pass |
| 50% rule | Operating costs run at about half of gross income, not counting the mortgage. What is left has to cover principal and interest. | $1,250 left against a $1,283 payment: about $33 a month short |
| 70% rule | For a fix and flip, pay no more than 70% of the after repair value, minus the repair costs. | Not used for a buy and hold rental |
The example shows why the rules disagree. It clears the 1% and 7% tests and still fails the 50% test, because the rule assumes $1,250 a month of costs while the itemized figures on the Full deal analysis tab come to $807 plus vacancy. When your own expenses land far below half of the rent, check that nothing is missing, such as capital reserves for a roof or furnace, before you trust the higher number.
What is a good return on a rental property?
No single number fits every investor, but most aim for a cash on cash return above 5%, at least $100 a month per door, and enough NOI to cover the loan 1.25 times.
| Measure | Too thin | Workable | Strong |
|---|---|---|---|
| Cash on cash return or ROI | Under 5% | 5% to 10%, and 8% to 12% is attractive to many investors | Over 10%; 12% and up when the risk is manageable |
| Monthly cash flow per door | Under $100 | $100 or more | $100 or more after conservative vacancy and repair figures |
| Debt service coverage (DSCR) | Under 1.00: rent cannot cover the loan | 1.00 to 1.24, which some lenders will accept | 1.25 or higher, the minimum most lenders look for |
| The $250,000 example | 3.9% cash on cash | $228 a month, DSCR 1.18 | 6.5% total ROI in year one |
Cash on cash counts only the cash that reaches your account. Total ROI also counts the loan principal paid down and, when you enter it, appreciation.
Cap rate has no fixed good figure, because it moves with interest rates and with how risky buyers think a market is. Compare it against similar properties in the same area rather than against a national target, and remember that it ignores the loan entirely. Two buyers paying the same price see the same cap rate, even if one pays cash and the other borrows 80%.
How do returns differ by type of rental property?
The spread between markets is wider than the spread between property types, which is why your own rent and price matter more than any average.
| Property type | Recent published figures | How to use it |
|---|---|---|
| Single family rentals | Potential gross rental yields of 3.1% to 14.5% by county in 2026; 9.8% in Cook County, IL, 8% in Harris County, TX, 4.5% in Orange County, CA | Rent to price is the first thing to check |
| Small multifamily (2 to 4 units) | No reliable national return figure is published | Enter the combined rent of every unit, with a vacancy rate for the building, and compare per door |
| Large multifamily (5+ units) | Stabilized New York City apartments at 5% to 5.5% cap rates in the first half of 2026; apartment REITs returned minus 8.56% in 2025 with a 4.12% dividend yield | Cap rate drives the price, so NOI is what you negotiate on |
| Short term and vacation rentals | No fair national average; income swings with the season and the nightly rate | Set vacancy to the share of nights you expect to be empty |
| Commercial property | Suburban Class A office in Chicago at 10% to 12.5% cap rates in the first half of 2026; REIT returns in 2025 of 17.05% for industrial, 5.05% for retail and minus 13.99% for office | Results split hard by sector, so judge each building on its own lease terms |
| REITs | All equity REITs: 2.27% in 2025, 5.77% a year over 10 years and 6.57% a year over 20 years, with a 4.07% dividend yield | A hands off yardstick: a rental should beat it to justify the work |
Gross yields leave out every expense, and REIT figures are total returns on listed shares, so neither is directly comparable with a cash on cash return.
What expenses should you include for a rental property?
Missing costs are the usual reason a deal looks better on paper than in the bank. Budget for these even when a property is new or you manage it yourself.
| Expense | How to work it out | Typical figure |
|---|---|---|
| Vacancy | The share of the year a unit earns nothing between tenants. | US rental vacancy 7.3% (second quarter of 2026): South 9.5%, Midwest 6.9%, Northeast 5.9%, West 5.3% |
| Property management | A percentage of rent collected, plus leasing and setup fees. Count it even if you self manage, because your time has a cost and you may hire help later. | 8.49% average; most owners pay 8% to 12%, with 10% the common figure |
| Maintenance and repairs | Set money aside every month, not when something breaks. | About 1% of the property's value a year ($2,500 on a $250,000 home) |
| Property tax | Use the current bill from the county assessor, then check whether a sale triggers a reassessment. | Varies by county |
| Insurance | A landlord policy quote, not a homeowner policy. | Get a quote |
| HOA and utilities | Dues from the association, plus any water, trash, lawn or pest bills the landlord pays. | From the statements |
| Mortgage (not an operating cost) | Principal and interest only; it sits below NOI. | 30 year fixed average 7.28% on October 1, 2026; use your own quote |
What changes a rental property's cash flow the most?
Small changes in rate, vacancy or upkeep move cash flow more than most buyers expect. Each line changes one input on the $250,000 example ($228 a month).
| Change | What happens | Monthly cash flow |
|---|---|---|
| Interest rate up 1 point | The payment rises by about $130 on a $187,500 loan. | $98 |
| 20% down instead of 25% | Less cash in, but a bigger loan; cash on cash falls to 3.0%. | $142 |
| Vacancy at 10% instead of 7.3% | Fewer months of rent collected. | $167 |
| Rent up $100 | Vacancy and the manager take a share of it, so only about $75 reaches cash flow. | $303 |
| Self managing (0% fee) | Adds $232 a month, but you take the tenant calls, showings and repairs yourself. | $460 |
| Maintenance at 12% of rent | An older house or one with tired systems. | $128 |
| Property tax up $1,000 a year | A reassessment after the sale can do this. | $145 |
| $10,000 of rehab | Cash flow stays the same, but cash invested rises to $80,000 and cash on cash drops to 3.4%. | $228 |
Landlords: the cost no rental spreadsheet shows is the call you missed.
A leak reported at 11pm that waits until morning turns into a bigger repair bill, and a prospect who hits voicemail books a showing somewhere else, so your vacancy line grows. ServiceAgent answers tenant, maintenance and leasing calls around the clock, writes up the problem, books the vendor or the viewing into your calendar and texts the caller back, so the maintenance and vacancy numbers you entered above stay closer to plan.
Book a free demoFrequently asked questions
Plain answers on rental property ROI, the rules of thumb and what to type into each field.
Book a free demoHow do I calculate rental property ROI?
Divide the yearly cash flow by the total cash you put in (down payment, closing costs and rehab) and multiply by 100. That is cash on cash return. On a $250,000 rental with $70,000 of cash in and $2,734 of yearly cash flow, it is 3.9%. Add the loan principal paid down in the year, $1,804 here, and the total ROI for year one is 6.5%.
What is a good ROI for a rental property?
Under 5% is usually too thin to be worth the work. Returns of 5% to 10% are reasonable when the figures include honest vacancy and repair allowances, many investors find 8% to 12% attractive, and anything above 10% to 12% counts as a strong deal if the risk is manageable. Location, financing and how hands on you want to be all shift the target.
What is the 50% rule in rental property?
The 50% rule says operating costs (tax, insurance, repairs, management, utilities and reserves) will take about half of the gross rent, not counting the mortgage. On $2,500 a month, that leaves $1,250 to pay principal and interest; whatever remains after the loan is your rough cash flow.
What is the 7% rule for rental property?
It says the yearly gross rent should be at least 7% of the purchase price. A $300,000 property would need $21,000 a year, or $1,750 a month. Like the 1% rule it leaves out taxes, insurance, repairs and vacancy, so use it to shortlist, then run the full analysis.
Does this calculator include mortgage payments?
Yes. It works out the monthly principal and interest from the price, down payment, rate and term, and subtracts it from NOI to give cash flow. Choose No loan (cash) under Loan term to see an all cash purchase.
Can I use this for short term rentals (Airbnb)?
Yes. Enter your average monthly booking income as rent and set the vacancy rate to the share of nights you expect to be empty across the year. Add cleaning, platform fees, furnishing upkeep and utilities to Other expenses.
What expenses should I include?
Property tax, landlord insurance, HOA dues, maintenance and repairs, property management, any utilities you pay and a vacancy allowance. The mortgage comes off after NOI. A common guide for upkeep is about 1% of the property's value a year.
What vacancy rate should I assume?
The US rental vacancy rate was 7.3% in the second quarter of 2026, ranging from 5.3% in the West to 9.5% in the South. Use at least 6% unless you have a long record of your own showing less, and use a higher figure for seasonal or student markets.
Can I compare properties with this tool?
Yes. Run each property with the same vacancy, maintenance and management settings, then compare cash flow, cap rate and cash on cash return. Copy the link for each result so you can reopen and compare them later.
Does this tool help with loan qualification?
It does not approve a loan, but it shows the debt service coverage ratio (NOI ÷ mortgage payments) that lenders look at. Most lenders want 1.25 or higher, and some accept down to 1.0, so check this figure before you apply.
How accurate is this rental property cash flow calculator?
The math is exact. Whether the answer holds up depends on the rent and expense figures you type in. Use real tax bills, insurance quotes and rents from comparable units, and rerun it whenever the rate or rent changes.
Leads growth and product marketing for ServiceAgent at SaaS Labs, where he has worked in product marketing since 2020. Writes ServiceAgent's coverage of AI call answering, CRM and home services operations.
Published by ServiceAgent, the AI front office for home service teams. Estimates only. Results depend entirely on the rent, costs and loan terms you enter and are not investment, tax, lending or legal advice. Rules of thumb and market figures change, so confirm big decisions with a lender, accountant or licensed real estate professional.