dopecalc

Real Estate Calculator

Analyze a rental property's cash flow, cap rate, cash-on-cash return, and annual ROI to evaluate its investment potential.

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About this Calculator

Analyze a rental property's cash flow, cap rate, cash-on-cash return, and annual ROI to evaluate its investment potential.

Formula & Calculations

Formula

Cash Flow = Rent - Vacancy Loss - (Mortgage + Taxes + Insurance + Maintenance + Management); Cap Rate = NOI / Property Price; Cash-on-Cash = Annual Cash Flow / Cash Invested
Where:
  • PP=Property purchase price
  • DP=Down payment amount
  • MR=Monthly rent collected
  • VR=Vacancy rate percentage
  • PT=Monthly property taxes
  • PI=Monthly property insurance
  • PM=Monthly maintenance allocation
  • MG=Monthly property management fee
  • MP=Monthly mortgage payment (principal + interest)

Assumptions

  • Vacancy rate accounts for periods when the property is unoccupied.
  • Cap rate uses Net Operating Income (NOI) before debt service.
  • Maintenance is typically estimated at 1% of property value annually.
  • Property management fees are typically 8-12% of collected rent if using a manager.

Calculation Examples

Example 1

Inputs:Price: $300,000, Down: $60,000, Rate: 6.5%, Term: 30yr, Rent: $2,500, Vacancy: 5%, Taxes: $300, Insurance: $100, Maint: $200
Result:Monthly Cash Flow: $383, Cap Rate: 6.20%, Cash-on-Cash: 7.65%

With effective rent of $2,375 after vacancy and $1,517 mortgage payment, this property generates $383/month in positive cash flow with a 7.65% cash-on-cash return.

Example 2

Inputs:Price: $500,000, Down: $125,000, Rate: 7%, Term: 30yr, Rent: $3,500, Vacancy: 8%, Taxes: $500, Insurance: $150, Maint: $350
Result:Monthly Cash Flow: $170, Cap Rate: 5.20%, Cash-on-Cash: 1.63%

The higher vacancy rate and expenses squeeze cash flow to just $170/month, producing only 1.63% cash-on-cash return, which may not justify the investment.

Example 3

Inputs:Price: $200,000, Down: $40,000, Rate: 6%, Term: 30yr, Rent: $2,200, Vacancy: 3%, Taxes: $200, Insurance: $80, Maint: $150
Result:Monthly Cash Flow: $551, Cap Rate: 9.72%, Cash-on-Cash: 16.53%

A lower-priced property with strong rent and low expenses delivers excellent cash flow and a cash-on-cash return exceeding 16%.

Frequently Asked Questions

What is a good cap rate for rental property?

Cap rates vary by market, but generally 4-10% is common. A higher cap rate means higher potential return but also higher risk. Urban core properties might have 4-6% cap rates, while suburban or tertiary markets may see 8-12%. Compare cap rates within your target market.

What is cash-on-cash return?

Cash-on-cash return measures the annual pre-tax cash flow relative to the total cash invested (down payment + closing costs). It helps you compare returns across properties with different financing structures. A cash-on-cash return of 8-12% is generally considered good for rental properties.