Rental Property Calculator
Assemble the complete year-one return on a rental — cash flow, principal repayment and appreciation together — rather than judging the deal on the cash figure alone.
Rental Property Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- First year only. Rent growth, expense inflation and lease rollover are not projected forward.
- Pre-tax throughout.
- Appreciation is an input assumption, not a forecast.
In short: A rental returns cash flow, principal repayment and appreciation simultaneously. On a 1,050,000 property with 294,000 invested, 18,509.57 of cash flow is only 31% of a 58,811.66 total first-year return once amortisation and 3% appreciation are counted.
Formula
total return = cash flow + principal repaid + appreciation
cash flow = NOI − debt service − capex
[('cash flow', 'what actually reaches the bank account'), ('principal repaid', 'equity built by the amortisation schedule'), ('appreciation', 'change in asset value, the least certain part'), ('invested', 'deposit plus closing costs')]
Worked Example
- Establish NOI on a defensible basis — real vacancy, real management fee.
- Compute debt service from the deposit, rate and amortisation.
- Subtract debt service and capital expenditure for cash flow.
- Add the principal your tenants repay in year one.
- Add appreciation, and be honest that it is an assumption rather than a calculation.
A 1,050,000 property at 25% down with 31,500 of closing costs puts 294,000 of cash in. NOI of 84,240 less 59,730.43 of debt service and 6,000 of capex leaves 18,509.57 of cash flow — a 6.30% cash-on-cash return. Add 8,802.09 of principal and 31,500 of appreciation at 3% and the total first-year return is 58,811.66, or 20.00%. Cash flow is under a third of it.
Strengths & Limits Of This Model
Where this engine is strong
- Shows all three cash and equity components together
- Reports what share of return each component provides
- States plainly what the 1% and 50% screens miss
Where it stops
- Single year
- Pre-tax
- Appreciation is assumed
Practical Use Cases
Judging a purchase properly
Seeing the whole return rather than the cash line alone.
Comparing against other assets
Putting a rental beside equities on a total-return basis.
Testing an appreciation assumption
Finding how much of the case depends on the least certain component.
Explaining thin cash flow
Showing a partner why a low-cash deal can still perform.
Screening quickly
Applying the 1% and 50% rules while knowing what they miss.
Methodology & Editorial Standards
Year-one principal is computed by iterating the amortisation schedule month by month rather than approximating, so the equity build is exact for the terms entered. Total return sums cash flow, principal and appreciation; tax is deliberately excluded because it depends on the investor rather than the property. The 1% screen is computed on NOI rather than gross rent, which makes it stricter than the rule as commonly quoted — the page says so rather than letting the difference pass unnoticed.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Rental Property Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is the 1% rule?
It asks whether monthly rent is at least one per cent of the purchase price. It is a screening filter for sorting listings, not a verdict, because it ignores operating expenses, financing and condition entirely. A property can clear the 1% rule comfortably and still lose money every month once taxes, insurance and management are paid.
What is the 50% rule?
The assumption that operating expenses will consume roughly half of gross rent over the long run, excluding the mortgage. It is a useful sanity check against pro-formas showing 25% expense ratios, but it is a crude average — a new build with separately metered utilities and an old building with master metering do not behave the same way.
Should I count appreciation as return?
Count it, but never rely on it. Over long holds appreciation is usually the largest component, so excluding it understates the investment badly. The discipline is to underwrite the deal so it works without appreciation, then treat any growth as upside rather than as the plan.
Why is my cash-on-cash so much lower than total return?
Because cash-on-cash counts only the cash. Principal repayment and appreciation are both real gains that never appear in your bank account in the year they occur. On a typical leveraged rental, cash flow is often less than a third of the total first-year return.
Does this include tax?
No. Depreciation, passive-loss rules and your marginal rate all sit outside a property-level calculation and depend on your wider position. It is entirely normal for a rental to show positive cash flow and a taxable loss simultaneously, which is a further return this page does not attempt to quantify.
How accurate is the principal figure?
Exact for the schedule entered — it is computed by iterating the amortisation month by month rather than approximating. It will differ from your statement if you make extra payments or if the rate adjusts.
What deposit should I use?
Conventional investment property financing typically requires 20% to 25% down. A larger deposit raises cash flow but lowers the return on equity when leverage is positive; a smaller one does the reverse while raising risk. Test several rather than assuming one is correct.
Is a negative-cash-flow rental ever sensible?
Sometimes, in high-growth markets or where rents are significantly below market and can be raised. But it means the asset consumes cash every month and the entire case rests on appreciation or repositioning. Know that you are making a growth bet rather than an income investment, and make sure you can fund the shortfall through a downturn.
How does this differ from the Cash Flow Calculator?
That page stops at cash — what arrives after the mortgage and capital works. This one adds principal repayment and appreciation to produce a total return. Use the cash-flow page to test whether you can afford to hold the property, and this one to judge whether it is worth owning.
Should closing costs be in the invested figure?
Yes. They are cash you spent and will not recover, so excluding them inflates every return metric. The same applies to any refurbishment done at purchase.