Will This Rental Property Actually Make Money?
Will this rental property make money?
Rental Property Investment Analyzer
Enter purchase price, financing, rent, and expenses to calculate cash flow, cap rate, cash-on-cash return, and 10-year projection. Results update live.
🏠 Property & Financing
Investment properties typically require 20–25%
Investment rates typically 0.5–0.75% above primary
National avg: 3–4%/yr
💵 Rental Income
Typical 5–10% · 1 month vacant = 8.3%
🔧 Operating Expenses
Landlord policy: ~$1,500–2,500/yr
Rule of thumb: 1% of value/yr
Roof, HVAC, appliances reserve
Typical 8–12% · 0 if self-managing
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Rental real estate is one of the most popular wealth-building vehicles — but most aspiring landlords dramatically underestimate expenses and overestimate net income. The difference between a cash-flowing property and a money pit often comes down to a few key metrics that most buyers never calculate before closing. This calculator runs a complete rental property analysis: gross rental income, vacancy allowance, operating expenses (taxes, insurance, maintenance, management, utilities), net operating income (NOI), mortgage debt service, and — most critically — monthly cash flow after all expenses and mortgage payments. It then computes three key investment metrics: Cap Rate (NOI / purchase price, a measure of property yield independent of financing), Cash-on-Cash Return (annual cash flow / total cash invested, the true return on your equity), and the Gross Rent Multiplier (purchase price / annual rent, a quick valuation screen). The difference between gross rent and actual cash flow is almost always larger than new investors expect. Vacancy costs alone typically run 5–10% of gross rent. Maintenance averages 1% of property value per year. Management fees are 8–12% of rent. Property taxes vary dramatically by state. Getting these right is the difference between a good investment and an expensive learning experience.
- →Evaluating a rental property before making an offer
- →Calculating whether a property's asking price makes financial sense
- →Comparing two investment properties with different prices and rent profiles
- →Understanding your true cash-on-cash return after mortgage, taxes, and expenses
- →Determining a maximum purchase price to achieve a target cap rate or cash flow
David is considering a duplex listed at $380,000 with gross monthly rent of $3,400. He plans to put 25% down ($95,000) and finance the rest at 7.25% for 30 years. After plugging in property taxes ($4,800/yr), insurance ($1,800/yr), maintenance ($3,800/yr), and 8% management fees, his monthly cash flow is -$180 — negative. The cap rate is 4.3% and cash-on-cash return is -2.3%. He decides to negotiate the price down or pass.
What is cap rate and what is a good cap rate?
Cap rate = Net Operating Income / Purchase Price. It measures property yield independent of financing. In major cities, 4–6% is typical; in secondary markets, 6–9% is common. Higher cap rates generally mean more risk or lower appreciation potential. Investors typically target cap rates above the local risk-free rate.
What is cash-on-cash return?
Cash-on-cash return = Annual Cash Flow / Total Cash Invested (down payment + closing costs). It measures the actual cash return on the equity you've deployed. A 6–12% cash-on-cash return is generally considered solid for rental properties in most markets.
How much should I budget for maintenance and vacancy?
Industry standards: vacancy 5–10% of gross rent (or 1 month/year), maintenance 1% of property value annually, capital expenditures 1% additional. Many new investors skip CapEx (roof, HVAC, appliances) and are shocked when large bills arrive.
What is the 1% rule for rental property?
The 1% rule is a quick screen: monthly rent should be at least 1% of purchase price. A $200,000 property should rent for $2,000+/month. Properties that meet the 1% rule are more likely to cash flow positively. In expensive markets, 0.5–0.7% is common — meaning thin or negative cash flow is typical.