Side Hustle

Rental Property ROI Calculator

Cash flow, cap rate, cash-on-cash return, and 10-year equity — everything you need to decide if a rental property is worth buying.

Property & Financing

Purchase Price ($)

Down Payment (%)

Mortgage Rate (%)

Loan Term (years)

Income

Monthly Rent ($)

Vacancy Rate (%) 5% = ~18 days vacant per year

Expenses

Property Management (%) % of collected rent (10% is typical)

Annual Insurance ($)

Annual Property Taxes ($)

Annual Maintenance (% of value) 1% rule: expect 1% of value/year

HOA ($/month)

Other Monthly Expenses ($)

Monthly Mortgage Payment

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Monthly Net Cash Flow

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Annual Cash Flow

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Cap Rate

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Cash-on-Cash Return

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Gross Rent Multiplier

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Break-Even Rent

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10-Year Equity Build

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How to Analyze a Rental Property Investment

Rental properties generate returns through two channels: monthly cash flow (rent minus all expenses) and equity appreciation (loan paydown + property value growth). Smart investors analyze both before buying.

NOI = Annual Rent × (1 − Vacancy Rate) − All Expenses (excl. mortgage)
Cap Rate = NOI ÷ Purchase Price
Cash-on-Cash Return = Annual Cash Flow ÷ Down Payment
GRM = Purchase Price ÷ Annual Gross Rent

What is a good cap rate for rental property?

Cap rates vary widely by market. In high-cost cities like NYC or LA, cap rates of 3-5% are common. In Midwest or Sun Belt markets, 6-9% cap rates are typical. As a general rule, most investors target 5-8% cap rate. Below 4% means you're counting on appreciation rather than cash flow. Cap rate is calculated before your mortgage, so it measures the property's standalone income potential regardless of financing.

What is cash-on-cash return?

Cash-on-cash return measures your annual cash flow as a percentage of the cash you actually invested (your down payment plus closing costs). It's the most relevant return metric for leveraged real estate because it accounts for your financing. Most real estate investors target 8-12% cash-on-cash returns. Unlike cap rate, CoC return changes based on your mortgage terms and down payment amount.

What is the 1% rule for rental properties?

The 1% rule says a rental property's monthly rent should be at least 1% of its purchase price. So a $300,000 property should rent for $3,000/month. This is a quick screening tool, not a definitive analysis — in expensive markets, 0.7-0.8% may be the realistic benchmark. The rule helps identify properties likely to cash flow positively, but always run a full analysis as shown above with actual expenses before making any investment decision.