Guide · 3 min read · Updated October 9, 2026
Rental Property Calculator: How to Run the Numbers on a Rental
The four numbers every rental property calculator uses, how to figure each one, and a worked example that shows why a "good" rental can still lose money.
The short answer
A rental property calculator answers one question: does the rent cover every cost and the loan, with money left over? It does that with four numbers: monthly cash flow, cap rate, cash-on-cash return, and the 1% rule. Run all four with local tax, insurance, and rent figures, because a quick rule of thumb alone can hide a money-losing deal.
A rental can look like a bargain and still cost you money every month. A rental property calculator catches that before you make an offer. Here's what it does, step by step.
What does a rental property calculator measure?
A rental property calculator measures whether a property's rent covers its costs and its loan, and how hard your cash is working. Most calculators come down to four numbers:
Cash flow: money left each month after every cost and the loan payment.
Cap rate: net operating income divided by the price. It compares properties without the loan.
Cash-on-cash return: yearly cash flow divided by the cash you put in.
1% rule: monthly rent divided by price. A quick first screen.
How do you calculate cash flow on a rental property?
Cash flow on a rental property is the rent you actually collect minus operating expenses minus the loan payment. Work through it in this order:
- Gross rent: monthly rent × 12
- Minus vacancy: an allowance for empty months
- Minus operating expenses: property taxes, insurance, repairs, big-ticket replacements (roof, HVAC), management, HOA or lot rent
- = Net operating income (NOI)
- Minus the loan payment (principal and interest)
- = Cash flow
NOI is figured before loan payments, depreciation, and income taxes (Cove glossary). That's why two buyers with different loans get the same NOI but different cash flow.
What are cap rate and cash-on-cash return?
Cap rate and cash-on-cash return are two ways to measure a rental's return: cap rate ignores the loan, and cash-on-cash return includes it.
| Number | Formula | What it tells you |
|---|---|---|
| Cap rate | NOI ÷ purchase price | Income for the price, as if you paid cash |
| Cash-on-cash return | Yearly cash flow ÷ cash invested | Return on the money you actually put in |
| 1% rule | Monthly rent ÷ price | Quick screen, should be 1% or more |
Cap rate = NOI ÷ property value (The Motley Fool). Cash invested = down payment + closing costs + repairs before renting, and BiggerPockets calls 8% to 12% cash-on-cash generally good (BiggerPockets).
Is the 1% rule still useful?
The 1% rule is useful only as a first filter, because it skips taxes, insurance, repairs, vacancy, and the loan. A property that passes still needs the full math (FNRP). The example below shows why.
Worked example: does this rental make money?
Example (hypothetical numbers): a $150,000 single-family rental that rents for $1,400 a month.
| Line | Yearly |
|---|---|
| Gross rent ($1,400 × 12) | $16,800 |
| Vacancy (5%) | −$840 |
| Property taxes | −$2,100 |
| Insurance | −$1,200 |
| Repairs (10% of rent) | −$1,680 |
| Big replacements (5% of rent) | −$840 |
| Management (8% of rent) | −$1,344 |
| NOI | $8,796 |
| Loan payment ($120,000, 30 yrs, 7%) | −$9,580 |
| Cash flow | −$784 (about −$65/month) |
- 1% rule: $1,400 ÷ $150,000 = 0.93%. Close to passing.
- Cap rate: $8,796 ÷ $150,000 = 5.9%.
- Cash flow: negative. With $37,500 in (20% down, $4,500 closing, $3,000 repairs), cash-on-cash return is below zero.
On the surface it looked close to a deal. With every line in, it loses about $65 a month. To break even you'd need more rent, a lower price, or lower costs. That's the whole point of running the numbers.
Which numbers should you check locally?
The numbers to check locally are the ones that swing the most from place to place. Before you trust any calculator, use the LAND + HOME rental number check:
- Real rent: 3 to 5 similar rentals nearby, not the listing's estimate
- Property taxes from the county, at the new assessed value
- An insurance quote for a rental (landlord) policy
- Your actual loan rate and terms from a lender
- HOA fees or lot rent, if any
- An inspection or repair estimate before you set the repair line
Planning to rent out a home on land? Read buying a mobile home with land for the financing side, and use a move-in move-out checklist once you have tenants.
The bottom line
A rental property calculator is only as good as the numbers you put in. Run cash flow, cap rate, cash-on-cash return, and the 1% rule together, using local rent, taxes, insurance, and loan quotes. If the deal only works with optimistic numbers, it doesn't work. Know your numbers before you make the offer.
Common questions
How do you calculate cash flow on a rental property?
Start with the yearly rent, subtract an allowance for vacancy, then subtract operating expenses and the yearly loan payment. What's left, divided by 12, is your monthly cash flow.
What is a good cap rate for a rental property?
There is no single good cap rate. A higher cap rate means more income for the price but often more risk, so compare it with similar rentals in the same area.
What is the 1% rule in real estate?
The 1% rule is a quick screen that says monthly rent should be at least 1% of the purchase price. It ignores taxes, insurance, repairs, and the loan, so treat it as a first filter only.
What is a good cash-on-cash return?
BiggerPockets cites 8% to 12% as generally good, with lower returns acceptable in expensive markets. Your own target depends on your goals and risk.
Does cap rate include the mortgage?
No. Cap rate uses net operating income, which is figured before loan payments. Cash flow and cash-on-cash return are the numbers that include the mortgage.
When you're ready for the next step
Keep reading
Move-In Move-Out Checklist: How to Do a Rental Inspection RightHow landlords and tenants can document a rental's condition at move-in and compare it at move-out, so the security deposit isn't guesswork.
Buying a Mobile Home With Land: A Step-by-Step GuideThe steps to buy a manufactured home with land in the right order, from financing type to land checks to closing.