How the rental property calculator works
The calculator starts from gross rent, subtracts vacancy and every operating expense to get net operating income (NOI), then subtracts the mortgage payment to get cash flow. Percentage-based costs (maintenance, CapEx and management) are calculated on gross rent, which is how most property managers and investors quote them.
What is a good monthly cash flow on a rental?
Many buy-and-hold investors look for at least $100 to $200 per door per month after setting aside reserves for repairs, CapEx and vacancy. A property that only breaks even can still work if you expect strong appreciation or plan to raise rents, but it leaves no cushion for a bad tenant or a new roof.
Don't skip CapEx and vacancy
The most common mistake in rental analysis is leaving out costs that don't show up every month. Roofs, HVAC systems and water heaters wear out; setting aside 5–10% of rent for capital expenditures turns a surprise bill into a planned one. The same goes for vacancy: even a good unit sits empty between tenants.
The 1% rule
The 1% rule is a quick screen: monthly rent should be at least 1% of the purchase price. A $250,000 house should rent for $2,500 or more. In many US markets today few properties pass, so treat it as a first filter, never as a reason to skip the full analysis above.
Why DSCR matters
Debt service coverage ratio compares NOI with your mortgage payment. A DSCR below 1.0 means the property does not pay its own debt. DSCR lenders typically want 1.20–1.25 or higher.
Frequently asked questions
What expenses should I include when analyzing a rental property?
Property taxes, insurance, HOA dues, maintenance, capital expenditure reserves, property management, vacancy, and any utilities you pay as the owner. Leave out the mortgage when calculating NOI; it is subtracted afterwards to get cash flow.
Should I include property management if I self-manage?
Yes. Budgeting 8–10% for management shows whether the deal still works if you hire a manager later, and buyers or lenders will value the property that way.
What is the difference between NOI and cash flow?
NOI is income minus operating expenses, before any loan payments. Cash flow is NOI minus your mortgage payment. NOI describes the property; cash flow describes your specific financing.
Is cap rate or cash on cash return more important?
They answer different questions. Cap rate compares properties regardless of financing. Cash on cash return tells you what your own invested cash earns with your loan terms. Look at both.