How to read this result
In the default example, effective gross income is $37,620.00. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Start with scheduled rent and other monthly income, annualize them, then apply vacancy. Deduct property-level operating expenses and the management fee to find NOI. Deduct debt service only after NOI to find cash flow. Divide NOI by price for cap rate and cash flow by cash invested for cash-on-cash.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Purchase price (USD)
- Property acquisition price; do not calculate financing here. Minimum: 0.
- Monthly rent (USD/month)
- Expected scheduled monthly rent. Minimum: 0.
- Monthly other income (USD/month)
- Parking, laundry or other property income. Minimum: 0.
- Vacancy rate (%)
- Expected economic vacancy/credit loss. Minimum: 0. Maximum: 100.
- Annual property tax (USD/year)
- User-entered annual property tax. Minimum: 0.
- Annual insurance (USD/year)
- User-entered property insurance cost. Minimum: 0.
- Annual maintenance (USD/year)
- Recurring maintenance reserve/expense assumption. Minimum: 0.
- Management fee (% of EGI)
- Property management percentage applied to effective gross income. Minimum: 0. Maximum: 100.
- Other operating expenses (USD/year)
- HOA, utilities paid by owner, admin and similar recurring costs. Minimum: 0.
- Annual debt service (USD/year)
- User-entered principal+interest debt service; not calculated as a mortgage. Minimum: 0.
- Total cash invested (USD)
- Down payment plus closing, rehab and other cash invested. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Purchase price | $350,000.00 |
| Monthly rent | $3,200.00 |
| Monthly other income | $100.00 |
| Vacancy rate | 5.00% |
| Annual property tax | $4,200.00 |
| Annual insurance | $1,800.00 |
| Annual maintenance | $2,400.00 |
| Management fee | 8.00% |
| Other operating expenses | $0.00 |
| Annual debt service | $21,600.00 |
| Total cash invested | $90,000.00 |
| Item | Default scenario |
|---|---|
| Effective gross income | $37,620.00 |
| NOI | $26,210.40 |
| Annual cash flow | $4,610.40 |
| Cap rate | 7.49% |
| Cash-on-cash return | 5.12% |
Assumptions and limitations
Scenario estimator based on user inputs. It is not an appraisal, lending decision, tax calculation or investment recommendation.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Putting debt service inside operating expenses reduces both NOI and cash flow twice. Maintenance is an annual operating allowance here; do not also include the same repairs in another expense line.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
- Fannie Mae — Selling Guide B3-3.8-01, General Rental Income Information (09/02/2026)Current U.S. rental-income documentation context; comps/market rent and qualifying-income concepts.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Frequently asked questions
Does this rental model calculate a mortgage payment?
No. Annual debt service is entered by you. The tool evaluates the property using that payment and does not infer a loan rate, amortization schedule or lender approval.
Why are cap rate and cash-on-cash different?
Cap rate compares NOI with property price before financing. Cash-on-cash compares after-debt annual cash flow with your invested cash. Different financing can change the latter without changing NOI.