What This Calculator Estimates
This calculator estimates a rental property's monthly cash flow and cap rate based on rental income, total monthly expenses, and property value.
Formula / Method Used
Monthly Cash Flow = Monthly Rent − Monthly Expenses. Annual Net Operating Income = Monthly Cash Flow × 12. Cap Rate = (Annual NOI ÷ Property Value) × 100.
Worked Example
A $300,000 property renting for $2,200/month with $1,700 in monthly expenses produces $500 monthly cash flow, $6,000 annual NOI, and a 2% cap rate.
How to Interpret the Result
Positive monthly cash flow means the property pays for itself and generates income. Compare the cap rate against similar properties in the area to judge whether the deal is competitive.
Common Mistakes
- Leaving out vacancy allowance, maintenance reserves, or property management fees.
- Using gross rent instead of accounting for realistic occupancy rates.
- Comparing cap rates across very different property types or markets.
- Ignoring appreciation and depreciation, which affect total return separately.
Related Calculators
House Flipping Calculator · Mortgage Calculator · Home Equity Calculator
Frequently Asked Questions
What does this investment property calculator estimate?
It estimates monthly cash flow and cap rate for a rental property based on rental income, expenses, and property value.
What is cap rate?
Cap rate (capitalization rate) is annual net operating income divided by property value, used to compare rental property returns.
What should I include in monthly expenses?
Include mortgage payment, property taxes, insurance, maintenance reserves, property management fees, and vacancy allowance.
What is a good cap rate?
It varies by market, but many investors target 5-10%, with higher rates often reflecting higher risk or lower-growth areas.
Does this include appreciation?
No, this estimates cash flow and cap rate only, not potential property value appreciation over time.
Last updated: July 2026