Rental Property Calculator
Updated · By the CalculatorDash editorial team · How we check our maths
Quick answer
A $300,000 rental bought with 25% down at 7%, renting for $2,400 a month with 5% vacancy and expenses at 30% of rent, has a mortgage of about $1,497 and makes only about $63 a month of cash flow, a 0.9% cash-on-cash return on $84,000 invested. Small changes in rate, rent or price swing the result a lot.
How this calculator works
Cash flow is what's left from the rent each month after vacancy, operating expenses and the mortgage. Cash-on-cash return compares a year of cash flow with the cash you actually put in: down payment plus closing and repair costs. It's the clearest measure of how hard your own money is working.
When mortgage rates are high, many rentals that look profitable on rent alone barely break even after financing. Investors then rely on rent growth, principal repayment and appreciation, which aren't included in cash-on-cash return. Stress-test the deal with higher vacancy and expenses before buying.
The formula
- Mortgage
- standard 30-year amortisation on price × (1 − down %)
- Cash flow
- rent × (1 − vacancy) − rent × expense % − mortgage
- Cash-on-cash
- cash flow × 12 ÷ (down payment + closing costs)
Worked example
With 25% down, the $225,000 loan at 7% costs about $1,497 a month. Rent of $2,400 less 5% vacancy is $2,280; expenses at 30% of rent are $720. That leaves about $63 a month. On $84,000 invested ($75,000 down plus $9,000 closing), the cash-on-cash return is about 0.9%, and the cap rate is about 6.2%.
Tips
- 01Use 1–2% of the property value per year for maintenance on older homes.
- 02Budget for property management even if you plan to self-manage; your time has value.
- 03Compare cap rate with your mortgage rate: if the loan costs more, extra borrowing lowers your return.
Frequently asked questions
What is a good cash-on-cash return?
Many investors look for 8–12%, but it depends on the market, risk and how much appreciation you expect.
What is the 1% rule?
A screening rule that monthly rent should be at least 1% of the purchase price. It's a quick filter, not a substitute for full numbers.
Does cash flow include principal repayment?
No. Principal you repay builds equity but isn't cash in your pocket, so it's excluded from cash flow.
What expenses should I include?
Property tax, insurance, maintenance and repairs, capital reserves, management fees, HOA dues and any utilities you pay.