Rental Property Calculator

Key Rental Property Metrics Explained

Cap Rate (Capitalisation Rate) measures the return on a property if purchased in cash. It is the most widely used metric for comparing investment properties regardless of financing.

Cash-on-Cash Return measures your actual annual cash return on the money you invested (down payment plus closing costs and rehab). Unlike cap rate, it accounts for financing.

Gross Rental Yield is a quick first-pass metric that does not account for expenses or vacancy. Use it for initial screening only.

Break-Even Occupancy is the minimum occupancy rate needed to cover all expenses including the mortgage. Below this occupancy you lose money each month.

What Makes a Good Rental Property?

Cap Rate: Typically 4 to 10%. Higher is better but reflects more risk or a less desirable location. In prime urban markets, 4 to 5% is common. In secondary markets, 7 to 9% is achievable.

The 1% Rule: A rough screening tool. Monthly rent should be at least 1% of purchase price (e.g. $3,500/month on a $350,000 property). Markets rarely meet this rule today, but it helps filter obvious bad deals.

Cash-on-Cash Return: Most investors target 6 to 12% CoC. Below 6% is considered weak; above 12% is excellent and usually signals above-average risk or a below-market purchase.

Price-to-Rent Ratio: The purchase price divided by annual gross rent. A ratio below 15 generally favours buying; 15 to 20 is neutral; above 20 often favours renting.

Operating Expense Benchmarks