Rental Property Calculator

This calculator starts with the purchase price, financing terms, expected rent, and recurring operating expenses. It estimates the loan amount, monthly mortgage payment, gross income, operating expenses, net operating income, cash flow, cap rate, cash-on-cash return, and 1% rule ratio.

The mortgage payment uses a standard amortization formula based on loan amount, interest rate, and loan term. Operating expenses are calculated separately from mortgage debt service so you can see both property performance and financing impact.

Monthly cash flow is the estimated amount left after monthly income, operating expenses, and mortgage payment are included. Net operating income is annual income minus annual operating expenses before mortgage debt service.

Cap rate compares net operating income to purchase price. Cash-on-cash return compares annual pre-tax cash flow to cash invested, including down payment and closing costs. The 1% rule ratio compares monthly rent to purchase price as a quick screening metric.

Example: A rental property purchased for $300,000 rents for $3,000 per month. Annual gross rent is $36,000. If estimated annual operating expenses are $12,000, net operating income is $24,000.

Dividing $24,000 of NOI by the $300,000 purchase price gives an 8% cap rate. This example does not include mortgage debt service until cash flow is calculated, so the cap rate is not the same as monthly profit after financing.

Cash flow can change with rent demand, vacancy, property taxes, insurance, repair needs, HOA dues, property management costs, utilities, financing terms, and local rules. A higher interest rate or larger repair reserve can turn a property that looks strong into a much thinner deal.

Use realistic local assumptions whenever possible. Comparable rents, tax records, insurance quotes, inspection findings, and property management quotes can all make the estimate more useful.

The 1% rule asks whether monthly rent is about 1% of the purchase price. It can help you screen deals quickly, but it does not account for taxes, insurance, repairs, vacancy, financing, property condition, or local landlord rules.

A property can miss the 1% rule and still be reasonable in a lower-yield market. Another property can meet the 1% rule and still be risky if expenses or repair needs are high.

This calculator is for informational and planning purposes only and is not financial, tax, legal, lending, or investment advice. It cannot predict rent growth, future repairs, tenant behavior, tax treatment, local rule changes, or the exact terms a lender may offer.

Before buying an investment property, review the numbers with qualified professionals and verify property condition, rents, insurance, taxes, financing, and local rental requirements.