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Rental Property Profit Calculator

Before buying a rental property, smart investors run the numbers on cash flow, cap rate, and cash-on-cash return - the three metrics that separate a good deal from a costly mistake. This free rental property profit calculator handles all ten inputs that actually matter: rent, purchase price, down payment, mortgage rate, property taxes, insurance, vacancy, maintenance, and management fees. Enter your numbers and see whether the deal works before you make an offer.

Typical: 5-10%

0 if self-managed; typically 8-12%

Enter the monthly rent and purchase price to calculate profitability.
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This calculator provides estimates only and should not be used as financial or investment advice. Property markets vary significantly by location and time. Consult a qualified financial adviser or property professional before making investment decisions.

How to use this tool

  1. 1Enter the monthly rent you expect to collect and the purchase price of the property.
  2. 2Set the down payment percentage, mortgage interest rate, and loan term. The monthly payment is calculated automatically.
  3. 3Enter annual property taxes and annual homeowner insurance. Both are divided by 12 internally.
  4. 4Set the vacancy rate - the percentage of months the property is expected to be empty. A 5% vacancy equals roughly 18 days empty per year.
  5. 5Add monthly maintenance costs and your property management fee as a percentage of rent (0% if self-managed).
  6. 6Read the results: positive monthly cash flow means the property earns more than it costs. Cap rate and cash-on-cash return help you compare it to other investments.

Formula used

Monthly cash flow = monthly rent - mortgage payment - monthly taxes - monthly insurance - vacancy loss - management fees - maintenance. Cap rate = annual net operating income (NOI) / purchase price x 100. NOI excludes mortgage payments but includes all operating expenses. Cash-on-cash return = annual cash flow / total cash invested x 100, where cash invested is the down payment. Gross yield = annual rent / purchase price x 100.

Example

Single-family rental with 20% down at 7% mortgage rate

Purchase price: 300,000. Monthly rent: 2,000. Down payment: 20% (60,000). Mortgage rate: 7%, 30-year term. Monthly payment: 1,597. Annual taxes: 3,600 (300/month). Annual insurance: 1,200 (100/month). Vacancy: 5% (100/month loss). Maintenance: 150/month. Management: 0% (self-managed). Monthly cash flow: 2,000 - 1,597 - 300 - 100 - 100 - 150 = -247. Negative. Cap rate: 4.2%. This deal needs a lower price or higher rent to work.

Same property with rent raised to 2,400

All inputs identical except monthly rent is 2,400. Monthly cash flow: 2,400 - 1,597 - 300 - 100 - 120 (5% vacancy) - 150 = 133. Positive. Gross yield: 9.6%. Cap rate: 5.6%. Cash-on-cash return: 2.7%. A thin but positive return - worth considering in a high-appreciation market.

Common use cases

  • Landlords evaluating a new buy-to-let property before making an offer
  • Property investors comparing multiple deals side by side on the same inputs
  • First-time investors learning which expenses eat into rental returns
  • Real estate agents showing clients the actual net yield after all costs
  • Investors stress-testing a deal at higher vacancy rates or lower rent

Common mistakes

  • Ignoring vacancy - even a stable rental sits empty between tenants; budget at least 5%.
  • Forgetting property management fees - if you ever want to stop self-managing, the fee (typically 8-12% of rent) can turn a profitable deal negative.
  • Using gross yield to judge a deal - gross yield ignores mortgage payments, taxes, insurance, and vacancies; only cap rate and cash-on-cash return reflect true performance.
  • Not including maintenance - a rule of thumb is 1% of the property value per year; on a 300,000 home that is 250/month.

Frequently asked questions

What is a good cap rate for a rental property?

Cap rate benchmarks vary by market. In high-cost cities (New York, San Francisco), a 3-4% cap rate is common because appreciation drives returns. In secondary and tertiary markets, investors typically seek 6-8% or higher. A cap rate below your local borrowing rate (e.g. 5% cap rate vs 7% mortgage) signals negative leverage - the property costs more to finance than it earns.

What is cash-on-cash return and why does it matter?

Cash-on-cash return measures the annual cash income as a percentage of the actual cash you invested (typically the down payment). Unlike cap rate, it accounts for the cost of your mortgage. A 6-8% cash-on-cash return is generally considered acceptable; anything above 10% is strong. It is the most relevant metric for financed purchases because it shows what your equity is actually earning.

Why is my cash flow negative even though the rent covers the mortgage?

Because rent rarely covers just the mortgage. Property taxes, insurance, maintenance, vacancy losses, and management fees often add 30-50% on top of the mortgage payment. A property whose rent equals the mortgage is typically cash-flow negative once all operating costs are included.

Should I include appreciation in this calculator?

This calculator focuses on cash flow and yield - the measurable, bankable income from the property today. Appreciation is speculative and location-dependent. Including it can make bad deals look good. Experienced investors underwrite to cash flow first and treat appreciation as a bonus.

What vacancy rate should I use?

5% is a safe default for most stable rental markets (equivalent to about 18 days vacant per year). In markets with high tenant turnover or seasonal demand, use 8-10%. For properties in tight rental markets with long-term tenants, 3-4% may be realistic.

Is this calculator accurate?

The calculations are mathematically precise given your inputs. The result is only as accurate as the numbers you enter - particularly the rent estimate, vacancy rate, and maintenance budget. Always verify actual tax, insurance, and HOA figures from official sources before buying.

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