Buying a rental property only makes sense if the rent it collects covers the mortgage, taxes, upkeep, and still leaves something in your bank account at the end of each month. This rental income calculator walks through that exact waterfall: start with the rent you charge, subtract vacancy, subtract every expense you actually pay, and see what is left over — monthly and annually — plus the cap rate an investor would quote on the deal.
Move the sliders and the result card updates instantly. If the number that comes out is negative, the property is bleeding cash; if it is comfortably positive, you can stress-test it by raising the vacancy rate or adding a management fee to see how resilient the cash flow really is.
How to Use
- Enter the Monthly Rent Collected — the gross rent you expect tenants to pay each month, before any deductions.
- Set the Vacancy / Loss Rate as a percentage of that rent. Five percent is a common planning figure (roughly two empty weeks a year); use 8–10% in softer rental markets.
- Type your Monthly Mortgage (P&I) — principal and interest only. If you own the property free and clear, enter 0.
- Enter the Monthly Property Tax — your annual tax bill divided by 12.
- Set Maintenance & Repairs as a percentage of rent. Ten percent is the classic middle-of-the-road estimate; older or multi-unit properties often need more.
- Add Monthly Landlord Insurance and Other Monthly Costs such as HOA dues, property management, landscaping, or utilities you pay. Leave them at 0 if they do not apply.
- Enter the Property Value / Purchase Price so the calculator can show your cap rate.
The result card breaks out the vacancy loss, the maintenance line, total monthly expenses, your monthly net rental income, the annualized figure, and the cap rate. A positive monthly net means the property pays you; a negative one means you are subsidizing the property out of pocket every month.
The Math Behind the Number
The calculation follows the standard real-estate cash-flow waterfall used by investors and lenders:
- Vacancy loss = monthly rent × vacancy rate ÷ 100.
- Maintenance cost = monthly rent × maintenance rate ÷ 100.
- Total monthly expenses = mortgage + property tax + maintenance + insurance + other costs.
- Monthly net rental income = rent − vacancy loss − total monthly expenses.
- Annual net rental income = monthly net × 12.
- Cap rate = annual net income ÷ property value × 100.
Worked example on the defaults: $2,000 rent minus a 5% vacancy of $100, minus a $1,200 mortgage, minus $250 of property tax, minus 10% maintenance of $200, leaves $250 per month, or $3,000 per year. On a $350,000 property that is a cap rate of 0.86% — low, because the mortgage is doing most of the work. Drop the mortgage to 0 and the same property throws off $1,450 a month, a far healthier 4.97% cap rate. That contrast is the single most important idea in rental math: cap rate measures the asset itself, while cash flow measures the asset plus your financing.
A quick reality check: most markets in the United States show cap rates between 4% and 10% for single-family rentals. Anything above 10% usually signals risk — older property, tough neighborhood, or deferred maintenance.
Examples
Example 1 — The default starter duplex. A landlord charges $2,000/month, assumes 5% vacancy, pays a $1,200 mortgage, $250/month in tax, and budgets 10% for maintenance. Net cash flow is $250/month, $3,000/year, and on a $350,000 purchase price the cap rate is 0.86%. The property barely clears the debt service — a reminder that a high-leverage deal in a moderate rent market can look okay on paper but leave almost no buffer for surprises.
Example 2 — A paid-off rental. The same house, owned free and clear: rent $2,000, vacancy $100, tax $250, maintenance $200, insurance $80, no mortgage. Net is $1,370/month, $16,440/year, and the cap rate on a $330,000 value is 4.98%. This is why investors who hold long enough to pay down the mortgage see their cash flow jump dramatically — the expenses do not change, but the biggest line item simply disappears.
Example 3 — A million-dollar apartment building. A 10-unit building collects $9,000/month in rent, carries a 7% vacancy assumption, a $3,200 mortgage, $1,100/month in property tax, 8% maintenance, $350 insurance, and $900 for management and utilities. Net cash flow works out to roughly $1,448/month, about $17,370/year; on a $1,800,000 purchase price the cap rate is 0.97% leveraged, or about 3.8% unleveraged. Larger deals live or die on management fees and vacancy assumptions, which is why those two sliders deserve more attention than the headline rent.
FAQ
What counts as rental income?
Rental income is the rent you actually collect each month, plus any fees the tenant pays you — parking, laundry, late fees — minus the portion you never collect because of vacancy or non-payment. This calculator models the cash version: money in minus money out, which is what your bank statement shows at month-end. For tax purposes you report income under Schedule E and deduct expenses on the same form, but depreciation (a paper expense) is not included here because it does not affect cash flow.
How much should I budget for vacancy?
Five percent of collected rent is the standard planning assumption and roughly equals two empty weeks per year. In tight markets with waiting lists you can model 2–3%; in softer markets or for higher-turnover properties, plan for 8–10%. Multiply your rent by the vacancy percentage to get the dollar loss — on $2,000 of rent, 5% is $100/month.
What is a good cap rate for a rental property?
Most US single-family and small multifamily rentals trade at cap rates between 4% and 10%. Newer construction in strong job markets often sits at 4–6%, while older or more specialized properties can ask 8–10%. A cap rate above 10% usually carries extra risk, and anything below 4% means the price is being driven by appreciation expectations rather than cash income.
Should I include the mortgage in my rental income calculation?
Yes — for cash flow, the mortgage is your largest monthly expense and decides whether the property actually pays you anything. The cap-rate figure, however, is conventionally calculated before debt service so that properties can be compared independent of financing. This calculator shows both: monthly net cash flow (with the mortgage) and the cap rate (annualized net income relative to value).
How much should I set aside for maintenance?
A common rule of thumb is to budget 1% of the property's value per year, which typically translates to 5–15% of monthly rent. Newer homes sit near the low end; rentals with aging roofs, HVAC units, or plumbing systems belong near the high end, and surprise replacements (a $6,000 new furnace) can wipe out an entire year of cash flow if you did not plan for it.
Is rental income taxable?
Yes. Rent collected is ordinary income on Schedule E of your federal return, offset by deductible expenses including mortgage interest, property tax, insurance, repairs, and depreciation. You cannot deduct the principal portion of the mortgage payment itself. This calculator estimates cash flow, not your tax bill — use a landlord tax estimator to model the after-tax outcome.
Disclaimer
This rental income calculator is provided for informational purposes only and does not constitute financial, tax, real-estate, or investment advice. All figures depend on the assumptions you enter; actual vacancy, maintenance, tax, and insurance costs vary by location, property condition, and market conditions. Cap rates and cash flows are estimates and should not be relied upon for a purchase decision. Always verify expenses with local contractors and insurers, and consult a qualified real-estate or tax professional before committing to an investment property.