How to read this result
In the default example, effective annual rent is $41,040.00. 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
Annualize the monthly rental rate and apply occupancy. Add other income, then deduct operating expenses, debt service and the annualized furnishing allowance.
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
- Monthly rental rate (USD/month)
- Typical furnished monthly rate. Minimum: 0.
- Occupancy rate (%)
- Expected occupied share of the year. Minimum: 0. Maximum: 100.
- Other annual income (USD/year)
- Parking, pet fees or other income. Minimum: 0.
- Annual operating expenses (USD/year)
- Utilities, management, maintenance and other operating costs. Minimum: 0.
- Annual debt service (USD/year)
- User-entered debt service. Minimum: 0.
- Annualized furnishing/replacement cost (USD/year)
- Annual furnishing/replacement allowance. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Monthly rental rate | $3,800.00 |
| Occupancy rate | 90.00% |
| Other annual income | $0.00 |
| Annual operating expenses | $15,000.00 |
| Annual debt service | $20,000.00 |
| Annualized furnishing/replacement cost | $2,000.00 |
| Item | Default scenario |
|---|---|
| Effective annual rent | $41,040.00 |
| Annual cash flow | $4,040.00 |
Assumptions and limitations
Does not determine local lease classification, tenant law or licensing rules.
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
Midterm vacancies and turnover can cluster between bookings. Annual averages do not show the timing of cash outlays or the initial furnishing purchase.
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.
Frequently asked questions
How should furnishing costs be entered?
Enter an annual planning allowance for the furnishing cost, separate from other operating expenses. Avoid subtracting the same purchase twice.
Does occupancy refer to days or bookings?
This simplified monthly-rate model uses the occupied share of the year. It does not count individual reservations or turnover fees.