What is a good cash-on-cash return for rental property?

Most investors target 8-12% cash-on-cash return. Above 12% is excellent. Below 6% may not justify the effort and risk of owning rental property, though appreciation potential and tax benefits can make lower returns worthwhile in strong markets.

How much should I budget for maintenance?

A common rule is 1-2% of the property value per year, or $100-150 per unit per month. Older properties require more. Many investors also set aside 5-10% of rent for a capital expenditure reserve (roof, HVAC, etc.).

What vacancy rate should I use?

5-8% is standard for most markets. In strong rental markets with low inventory, 3-5% may be realistic. In areas with high turnover or seasonal demand, budget 8-10%. Your local property manager can provide market-specific data.

Should I include property management in my analysis?

Yes, even if you plan to self-manage initially. Budget 8-10% of collected rent. This ensures your analysis shows the true cost of owning the property, and you'll have an accurate picture if you ever decide to hire a manager.

Free Rental Property Calculator 2026 | Analyze Cash Flow & ROI

What Is a Rental Property Calculator?

A rental property calculator helps investors analyze the financial performance of an income-producing property before purchasing. It takes into account purchase price, financing terms, rental income, operating expenses, and vacancy to calculate key metrics like monthly cash flow, cash-on-cash return, cap rate, and debt service coverage ratio (DSCR).

Unlike simple cap rate calculators, a full rental property analyzer factors in your specific financing terms to show you the actual return on your invested cash — not just the property's unlevered yield.

Key Metrics Explained

Monthly Cash Flow

Cash flow is the money left over each month after all expenses and the mortgage payment. Positive cash flow means the rent covers all costs and puts money in your pocket. Most investors target at least $100–200 per unit per month in positive cash flow.

Cash-on-Cash Return

Cash-on-cash return measures the annual return on the actual cash you invested (typically the down payment plus closing costs). A property with a 6% cap rate might deliver a 10–15% cash-on-cash return with leverage. Most investors target 8–12% cash-on-cash.

DSCR (Debt Service Coverage Ratio)

DSCR compares the property's NOI to its annual debt payments. A DSCR of 1.25 means the property generates 25% more income than needed to cover the mortgage. Lenders typically require a minimum DSCR of 1.2–1.25. Below 1.0 means the property loses money before expenses.

The 1% Rule and 50% Rule

The 1% rule is a quick screening tool: monthly rent should be at least 1% of the purchase price. A $200K property should rent for $2,000+/month. Properties meeting this threshold tend to cash flow well, though it's not a guarantee — always run the full numbers.

The 50% rule estimates that about 50% of gross rent goes to operating expenses (not including the mortgage). For quick math: if rent is $2,000/month, expect ~$1,000 in expenses, leaving $1,000 for debt service and cash flow.

How to Analyze a Rental Property

Start with the purchase price and financing terms to calculate your monthly mortgage payment. Then estimate gross rental income and subtract vacancy (typically 5–8%), operating expenses (taxes, insurance, maintenance, management, reserves), and the mortgage payment. The remainder is your monthly cash flow. Divide annual cash flow by your total cash invested to get cash-on-cash return. For a complete analysis including 30-year projections, equity buildup, and sensitivity testing, use CapRateKit's full Buy & Hold analyzer.

Free Rental Property Calculator