Using the Rental Property Calculator
Use a cash-invested amount that reflects the money actually committed to the deal. Depending on your comparison, that may include the down payment, purchase costs and initial improvements.
Worked example
Use the example inputs below to reproduce this result. These are the form's starting values, not recommended targets. Changing your inputs updates your result above; this worked example stays fixed for comparison. Results are rounded for display.
Example inputs
- Property purchase price
- 250000
- Monthly rent
- 2000
- Vacancy (%)
- 5
- Annual operating expenses
- 6000
- Annual mortgage payments
- 12000
- Cash invested
- 60000
Example result
- Net operating income
- 16,800
- Capitalization rate (%)
- 6.72
- Annual cash flow
- 4,800
- Cash-on-cash return (%)
- 8
Method and assumptions
Operating income excludes debt service; cash flow subtracts mortgage payments. Does not include appreciation, sale costs or tax effects.
Build a complete housing comparison
A housing calculation usually answers one part of a larger decision. Keep the purchase price, financing, recurring ownership expenses and eventual sale assumptions in separate lines of your budget. This makes it easier to spot costs omitted by a particular model. When comparing alternatives, use the same time horizon and currency for both.
Common question
Should principal repayments be included in annual debt payments?
Yes, when measuring cash flow. Both principal and interest leave the bank account, even though principal repayment can increase ownership equity.
Guide updated .