Rental Property Calculator

Start with gross rent, subtract vacancy loss and all operating expenses (property tax, insurance, maintenance, management, HOA) to get net operating income, then subtract the mortgage payment. In the default scenario, $2,300 rent with 5% vacancy collects $26,220 a year; $8,448 of operating expenses leaves an NOI of $17,772; and $14,969 of loan payments leaves about $2,803 a year, or roughly $234 a month.

Most US long-term rentals trade between roughly 4% and 10%. Newer properties in expensive coastal metros often sit at 4–5%, while smaller-market or older class-C properties can reach 8–10% — with more risk and management effort attached. Compare cap rates against similar properties in the same market rather than against a single national number.

Gross rental yield is annual rent divided by the purchase price; net rental yield puts NOI — rent after vacancy and operating costs — in the numerator, which makes it the same figure as the cap rate. On the defaults, $27,600 of yearly rent on a $250,000 property is an 11.0% gross rental yield, while the 7.1% cap rate is the net rental yield. Most US long-term rentals land around 5–8% net; higher yields usually signal smaller markets or older properties that carry more risk.

Cash-on-cash return is your annual pre-tax cash flow divided by the cash you invested — here, the down payment. If $62,500 down produces $2,803 of annual cash flow, that is a 4.5% cash-on-cash return. Many buy-and-hold investors target 6–8%, but the metric ignores loan paydown, appreciation and tax benefits, so total returns usually run higher.

Debt service coverage ratio is NOI divided by annual mortgage payments. A DSCR of 1.25 means the property earns 25% more than the loan requires. Most DSCR and commercial lenders want at least 1.20–1.25 to approve a loan; below 1.0 the property cannot cover its own mortgage from rent alone.

The 50% rule says operating expenses — everything except the mortgage — tend to consume about half of gross rent over the long run once you include vacancy, maintenance, capital repairs, management and turnover. It is a screening shortcut, not a budget. Real figures typically land between 35% and 55% of rent depending on property taxes, insurance costs and whether you self-manage.

Financing raises cash-on-cash return only when the cap rate beats the loan constant (annual debt service ÷ loan amount); at 7% over 30 years the constant is about 8%, so a 7% cap-rate deal actually cash-flows better per dollar when bought with cash. Leverage still lets you buy more property, build equity with borrowed money and capture appreciation on the full price. To compare, set the down payment equal to the purchase price — DSCR shows ∞ and cash flow rises by exactly the mortgage payment.

First-year ROI starts with cash-on-cash return, then adds principal paydown. On the defaults, year one produces about $2,803 of cash flow plus roughly $1,905 of equity from loan paydown — about $4,700 on $62,500 invested, or 7.5% before appreciation and tax effects. The year-by-year table below tracks both components over the full loan term.

A common planning range is 5–8% of gross rent — roughly two to four weeks empty per year including turnover time. Tight markets with long-tenured tenants can justify 3–5%, while student rentals or high-turnover units may need 10% or more. One month vacant every two years works out to about 4.2%.