Rental Property Calculator
Analyze the profitability of a rental property. Calculate ROI, Cap Rate, Cash Flow, and IRR.
Purchase Details
Operating Expenses (Monthly)
Income
Analysis & Exit
Monthly Cash Flow
$0
Cap Rate
0%
Cash-on-Cash Return
0%
Total Investment Needed
$0
Financial Breakdown
| Metric | Year 1 | Year 5 | Year 10 | Year 20 |
|---|
Understanding Rental Property Investments
Rental property investment involves real estate purchase, holding, leasing, and selling. Unlike stocks, real estate is capital-intensive and requires active management, but offers tax benefits, inflation hedging, and stable cash flow. Use this calculator to analyze the viability of an investment property.
Key Investment Metrics
When analyzing a property, pay attention to these three core metrics:
- Cap Rate: Net Operating Income (NOI) divided by the property price. It shows the yield if you paid all cash.
- Cash-on-Cash Return: Annual pre-tax cash flow divided by total cash invested. Measures the return on actual cash spent.
- IRR (Internal Rate of Return): A comprehensive metric that accounts for the time value of money over the holding period.
The 1% and 50% Rules
Quick rules of thumb for preliminary screening:
- The 1% Rule: Monthly rent should be at least 1% of the purchase price.
- The 50% Rule: Operating expenses (excluding mortgage) typically consume about 50% of rental income.
While useful, these rules are no substitute for detailed financial analysis using this calculator.