Buying a rental property is one of the most common ways to build long-term wealth, but the listing price alone tells you almost nothing about whether the deal actually makes money. The number that matters to an investor is the cash flow after every cost is paid, and the percentage of your own cash that comes back to you each year. This rental property calculator takes four quick inputs — purchase price, down payment, monthly rent, and your all-in monthly expenses — and instantly shows your down payment, loan amount, monthly and annual cash flow, cash-on-cash return, and both gross and net rental yield.
Adjust any slider and every figure recalculates. The default numbers mirror a classic starter deal: a $350,000 house, 20% down, $2,200 rent, and $1,500 in monthly expenses, which produces a $700 monthly cash flow and a 12% cash-on-cash return.
How to Use
- Enter the Purchase Price — the amount you agree to pay the seller, before closing costs. If you plan to put money into repairs, hold that for a separate rehab budget; this model focuses on the day-one numbers.
- Set your Down Payment as a percentage of the price. Investment-property loans typically require 15–25% down, and 20% is the most common threshold investors use.
- Type the Monthly Rent Collected — what you expect a tenant to pay each month, based on comparable listings in the area. Do not net out vacancy here; the expense line below already absorbs it.
- Fill in Monthly Total Expenses as one all-in figure. This should bundle mortgage principal and interest, property tax, landlord insurance, maintenance (budget roughly 1% of the property value per year), property management (usually 8–10% of rent), and a vacancy allowance. If you are not sure, start with the 50% rule: expect operating costs to eat about half of gross rent.
- Read the result card. The highlighted Cash-on-Cash Return is the headline ratio, and the gross and net rental yield lines let you compare this property against other listings on a level playing field.
The calculator treats your down payment as the cash you actually put into the deal, so the cash-on-cash return is the annual cash flow divided by that down payment. It does not add mortgage paydown or appreciation; those are real benefits, but they are separate from the cash sitting in your bank account each month.
The Formulas Behind the Numbers
The core arithmetic is deliberately transparent:
- Down Payment = Purchase Price × Down Payment %
- Loan Amount = Purchase Price − Down Payment
- Monthly Cash Flow = Monthly Rent − Monthly Total Expenses
- Annual Cash Flow = Monthly Cash Flow × 12
- Cash-on-Cash Return = Annual Cash Flow ÷ Down Payment × 100
- Gross Rental Yield = Annual Rent ÷ Purchase Price × 100
- Net Rental Yield = Annual Cash Flow ÷ Purchase Price × 100
Worked example on the default deal: purchase price $350,000 at 20% down means $70,000 cash invested and a $280,000 loan. Rent of $2,200 minus expenses of $1,500 leaves $700 per month, or $8,400 per year. Dividing $8,400 by the $70,000 down payment gives a 12.0% cash-on-cash return. The gross yield is $26,400 ÷ $350,000 = 7.54%, and the net yield is $8,400 ÷ $350,000 = 2.40%.
If the down payment is set to 0, the cash-on-cash return would divide by zero, so the engine flags an error instead of returning an infinite or undefined percentage.
Why Cash-on-Cash Is the Investor's Favorite Ratio
There are dozens of ways to score a real-estate deal, but cash-on-cash return wins because it answers the exact question an investor asks: "For every dollar I put into the bank at closing, how many cents come back to me each year in cash?" A stock might return 8% before taxes and require no leverage. A rental property with a 12% cash-on-cash return is beating that benchmark before you count principal paydown, appreciation, or tax shelter. As a rule of thumb, many U.S. investors target a 8–12% cash-on-cash return on leveraged deals; below 5% the deal usually struggles to beat a simple index fund once vacancy and surprises are factored in.
Gross yield ignores all expenses, so it is best used to compare neighborhoods fast. Net yield uses your actual cash flow, so it reflects the real after-cost performance. Use gross yield to short-list properties, then run the numbers through this calculator to see the net picture before you make an offer.
Examples
Example 1 — The default starter deal. A duplex listed at $350,000, 20% down, rents for $2,200 a month, and carries $1,500 in all-in monthly expenses. The down payment is $70,000, the loan is $280,000, and the property throws off $700 a month — $8,400 a year. That is a 12% cash-on-cash return, comfortably above the 8–12% target band.
Example 2 — A million-dollar multi-unit. A fourplex at $1,200,000 with 20% down ($240,000 cash) rents for $6,000 a month against $4,000 in expenses. Cash flow is $2,000 a month, or $24,000 a year, which is a 10% cash-on-cash return. Larger properties can still clear the bar because rent scales with the number of units even when the price tag looks intimidating.
Example 3 — A vacant or mispriced trap. The same $350,000 house, but the area has a six-month vacancy and you collect $0 rent while still paying $1,500 a month in mortgage, tax, and insurance. Cash flow swings to −$18,000 a year, and cash-on-cash return drops to about −25.7%. This is why underwriting the vacancy assumption matters more than the rent number itself.
FAQ
How do I calculate cash-on-cash return on a rental property?
Divide your annual pre-tax cash flow by the total cash you invested at closing. Annual cash flow is monthly rent minus all monthly expenses (mortgage, tax, insurance, maintenance, management, vacancy) times 12. Total cash invested is your down payment (plus closing costs and rehab if you want a stricter denominator). Multiply by 100 to get a percentage.
What is a good cash-on-cash return on a rental property?
Most U.S. investors target between 8% and 12% on a leveraged single-family or small-multifamily deal. Below 5%, the property usually fails to beat a low-cost index fund once vacancy and unexpected repairs are priced in. Above 15%, scrutinize the rent assumption and the condition of the home — an unusually high return often hides a deferred-maintenance or tenant-quality problem.
Should I use gross yield or net yield to compare properties?
Use gross yield to quickly short-list neighborhoods and listings, because it only requires the purchase price and the rent. Once you are seriously underwriting a deal, switch to net yield — it subtracts your actual operating expenses and reveals whether the property actually puts cash in your pocket. This calculator shows both side by side.
Does the down payment count as my only invested cash?
In this simplified model, yes. For a more conservative number, add closing costs (usually 2–5% of the price) and any renovation budget to the denominator. A larger invested-cash total lowers the cash-on-cash return but is closer to the true capital you risked on day one.
What monthly expenses should I include?
Bundle mortgage principal and interest, property tax, landlord insurance, maintenance (about 1% of value per year), property management (8–10% of collected rent), and a vacancy reserve (5–10% of rent). The 50% rule of thumb assumes operating costs run roughly half of gross rent before the mortgage.
What if my rental property loses money each month?
A negative monthly cash flow means rent does not cover your costs. Some investors accept this temporarily (for example, to build appreciation or to live in one unit of a duplex), but over a full portfolio it depletes your savings. Re-run the numbers with a lower purchase offer, higher realistic rent, or reduced expenses before buying.
Disclaimer
This rental property calculator is provided for informational purposes only and does not constitute financial, lending, tax, or real-estate advice. Estimates are based entirely on the inputs you enter; actual mortgage payments, tax bills, insurance premiums, maintenance costs, and rent levels vary by location, loan program, property condition, and market. Always confirm your underwriting with a licensed lender, a local property manager, and a qualified tax professional before purchasing an investment property.