Analyse any rental property investment. Calculate monthly cash flow, cap rate, cash-on-cash return, gross yield and break-even occupancy. Enter purchase price, rental income and all expenses.
Purchase Details
Rental Income
Monthly Operating Expenses
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.
NOI = Net Operating Income (gross rent minus vacancy and operating expenses, before mortgage)
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.
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.
| Expense | Typical Range | Notes |
|---|---|---|
| Property Tax | 0.5 to 2.5% of value/yr | Varies widely by state and county |
| Insurance | 0.5 to 1.5% of value/yr | Landlord policy required, not homeowner |
| Maintenance and Repairs | 1% of value/yr | Rule of thumb for ongoing repairs |
| Property Management | 8 to 12% of rent/mo | Plus lease-up fees; skip if self-managing |
| Vacancy | 5 to 10% of gross rent | Plan for at least one month empty per year |
| Capital Expenditure Reserve | 5 to 10% of rent/mo | HVAC, roof, appliances over time |