Free tool
Rental property calculator: cap rate and cash flow
Enter a price, rent, vacancy and costs to see monthly cash flow, the cap rate, net operating income, cash-on-cash return, gross yield and the 1% rule, then print or save a one-page summary for your client. This is an estimate, not investment advice. Everything stays in your browser — nothing you type is sent or stored.
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How the numbers are worked out
Scheduled income is the monthly rent and any other income times twelve. Vacancy takes a percentage off that, leaving the income you expect to collect. Property tax, insurance, repairs and maintenance, management and any HOA or utility costs come off that to give the net operating income (NOI). The cap rate is NOI divided by the purchase price. The mortgage payment is then taken off the NOI to give cash flow, and cash flow divided by the cash invested (down payment plus closing costs and repairs) is the cash-on-cash return.
Which number to look at
- Cap rate compares properties as if they were bought for cash, so loan terms do not skew it.
- Cash-on-cash shows the return on the buyer’s own money after the mortgage.
- Gross yield and the 1% rule are quick screens before you look at costs. They are easy to flatter, so do not stop there.
Using it with clients
- Start from the listed rent or a rent you can support with comparable rentals, then be honest about vacancy.
- Use real tax and insurance figures for the property rather than rules of thumb where you can get them.
- Run a cautious case and a hopeful case, print each as a one-page sheet, and talk through the gap.
- Say plainly that it is an estimate and not investment advice, and suggest the client checks it with their lender and accountant.
Related: the seller net sheet calculator, the price per square foot calculator and the rest of the free tools for real estate agents.
Related tools for buyers and investors: mortgage payment calculator, home buyer closing cost estimator and home inspection checklist.
Guide: How to explain cap rate and cash-on-cash to investor clients.
Common questions
What is a cap rate?
The capitalization rate is a rental property’s net operating income (NOI) for a year divided by its purchase price, shown as a percentage. If a property earns 17,000 a year in NOI and costs 300,000, the cap rate is about 5.7%. It ignores the mortgage, so it compares properties on their own income rather than on how they are financed.
How do you calculate NOI?
Net operating income is the rent and other income you expect to collect after vacancy, minus the operating expenses of running the property: property tax, insurance, maintenance, management, HOA fees and utilities you pay. Mortgage payments, income tax and depreciation are not operating expenses, so they are left out.
What is cash-on-cash return?
Cash-on-cash return is the yearly cash flow after the mortgage payment divided by the cash you actually put in (the down payment plus closing costs and any up-front repairs). It shows what the money you invested earns each year once financing is counted, which the cap rate deliberately ignores.
What is the 1% rule?
The 1% rule is a quick screen: monthly rent should be at least 1% of the purchase price. A 300,000 property should rent for about 3,000 a month to pass. It is only a rough filter. In high-priced areas most properties fail it and can still be sound, and passing it says nothing about taxes, repairs or vacancy.
What is gross yield?
Gross yield is a year of scheduled rent and other income, before vacancy and expenses, divided by the purchase price. It is the simplest comparison and the easiest to overstate, because it leaves out every cost of owning the property. This calculator shows it next to the cap rate so you can see the gap.
What is a good cap rate?
There is no single answer. Cap rates vary by market, property type, condition and interest rates, and a higher rate usually comes with more risk or a weaker location. Compare a property with similar ones nearby and with what the buyer can earn elsewhere, rather than against a fixed number.
Does the calculator save what I enter?
No. Prices, rents, names and contact details stay in your browser and are not sent to Kadapt, stored, or used in analytics. The only thing counted is that someone pressed the print, PNG or copy button, never what was on the sheet.
Is this investment advice?
No. It is an estimating aid built only from the figures you enter, and every figure is an assumption. Real results depend on rents, vacancy, repairs, taxes, financing terms and the market. A buyer should check the numbers with a lender and, where it matters, an accountant or financial adviser before buying.