🏘️ Real Estate Investment Calculator
Analyze a rental property's monthly cash flow, cap rate, and cash-on-cash return before you invest.
Property Details
Investment Analysis
Cap Rate measures return based on the property's own income vs. price, excluding financing. Cash-on-Cash Return measures your actual cash return relative to the cash you invested (down payment + closing costs).
How the Real Estate Investment Calculator Works
This calculator estimates the monthly mortgage payment on your financed amount, subtracts all operating expenses and vacancy loss from rental income, and computes two standard investment metrics.
Formula
Mortgage Payment = L × r × (1 + r)ⁿ / [(1 + r)ⁿ − 1]
Vacancy Loss = Rent × Vacancy%
Monthly Cash Flow = Rent − Vacancy Loss − Mortgage Payment − Operating Expenses
Cap Rate = (Annual Rent − Annual Operating Expenses, excluding mortgage) / Purchase Price × 100
Cash-on-Cash Return = Annual Cash Flow / (Down Payment + Closing Costs) × 100
Worked Example
For a $300,000 property with 20% down ($60,000) and $6,000 in closing costs, financed at 6.5% over 30 years, renting for $2,400/month with $620 in combined monthly operating expenses and a 5% vacancy rate: the $240,000 loan carries a monthly mortgage payment of $1,516.96, and after a $120 vacancy loss and expenses, monthly cash flow is $143.04. That works out to a 6.64% cap rate on the purchase price, and a 2.60% cash-on-cash return on the $66,000 actually invested.
Frequently Asked Questions
What's a good cap rate for rental property?
Cap rates vary by market, but many investors target 4-10%. Higher cap rates often indicate higher risk or lower-appreciation markets, while lower cap rates are common in high-demand areas.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores financing and measures the property's raw income potential relative to its price. Cash-on-cash return accounts for your mortgage and measures the actual cash return on the cash you invested.
Why include a vacancy rate?
No rental property stays occupied 100% of the time. Budgeting a vacancy percentage (commonly 5-8%) gives a more realistic picture of expected income than assuming full occupancy year-round.