For rental investors
Rental property calculator: cap rate and cash-on-cash return
Enter the rent, your vacancy allowance, the property’s running costs and what you would pay, and see its net operating income, cap rate and cash-on-cash return. It runs in your browser and nothing you type is sent to us.
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- NMLS #103098
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Fidelity Residential · NMLS #103098 · Equal Housing Lender
Calculator
Cap rate and cash on cash return calculator
Enter the income, your own allowances, the running costs, the price and the cash you would put in. Add the monthly loan payment from your own quote if you would borrow. Every figure below is worked out from what you enter.
Everything here runs in your browser. Nothing you type is sent to us, saved, or added to the page address. See our Privacy Policy.
Income
Total for all units.
Parking, laundry or storage. Leave blank if none.
Your own estimate of income lost between tenants and to late or missed rent. Leave blank for none.
Operating costs
Leave blank if none.
Water, trash, common-area power, lawn or snow. Leave blank if tenants pay them.
From a manager’s quote, or your own estimate. Leave blank if you manage it yourself.
Your own estimate for repairs and replacing worn items over time.
The purchase and your cash
If you would buy with cash, enter the whole price here.
Leave blank if none.
From your own quote. Leave blank if you would buy with cash. Taxes and insurance are already counted above.
Your estimate
This is an estimate, not an offer or a loan decision. It is worked out from the numbers you enter.
| Gross income | – |
|---|---|
| Your vacancy allowance | – |
| Collected income | – |
| Property taxes | – |
| Insurance | – |
| Association dues | – |
| Utilities and other costs | – |
| Property management | – |
| Repairs and upkeep | – |
| Operating costs | – |
| Net operating income (NOI) | – |
| Net operating income, per year | – |
|---|---|
| Loan payments, per year | – |
| Cash flow, per year | – |
| Cash flow, per month | – |
| Cash you put in | – |
This calculator gives estimates for information, worked out from the numbers you enter. It is not a loan application, a rate quote, an offer of credit, a loan decision or a commitment to lend. Any loan payment is the one you enter from your own quote; we do not state or suggest a rate, term or payment on this page. Income taxes, depreciation, the loan balance going down and any change in the property’s value are not counted. To finance a rental, see investment property loans and portfolio rental loans.
Guide
How the rental property calculator works
Collected income: a year of rent and other income, minus your vacancy allowance.
Operating costs: the yearly property taxes and insurance, twelve months of association dues and of the utilities you pay, management as a share of the collected income, and repairs as a share of the rent.
Net operating income (NOI): collected income minus operating costs. It leaves out the loan payment on purpose, so two properties can be compared however they are financed.
Cap rate: net operating income divided by the purchase price. It is the yearly return the property would give if you bought it with cash.
Cash-on-cash return: a year of cash flow (net operating income minus a year of loan payments) divided by the cash you put in: the down payment, the closing costs you pay and any work at purchase.
Gross rent multiplier: the price divided by a year of gross income, before any costs.
A worked example, with example figures. Jordan Example, a fictional investor, looks at a single-family rental priced at $250,000. Every figure here is an example for you to replace with your own; none is our rate, term or limit.
Income. The rent is $2,000 a month, $24,000 a year. Jordan allows 5% for vacancy, $1,200, so the collected income is $22,800.
Operating costs. Taxes of $3,000 and insurance of $1,200 a year, management at 8% of collected income ($1,824) and repairs at 5% of the rent ($1,200): $7,224 a year in all.
NOI and cap rate. $22,800 minus $7,224 leaves a net operating income of $15,576. Divided by the $250,000 price, the cap rate is about 6.2%.
Cash-on-cash return. Jordan would put in $75,000 for the down payment and closing costs, and the loan payment on Jordan’s own quote is $1,100 a month (example figure), $13,200 a year. The cash flow is $15,576 minus $13,200, or $2,376 a year, about $198 a month. Divided by the $75,000 put in, the cash-on-cash return is about 3.2%.
Next. Jordan checks how the rent compares with the full payment in the DSCR calculator, then asks a loan officer for a quote. Get a quote
Questions
Rental property calculator questions
How do you calculate cap rate?
Divide the property’s net operating income for a year by its price. Net operating income is the collected rent and other income minus the running costs: taxes, insurance, association dues, utilities you pay, management and repairs, but not the loan payment. The cap rate calculator above does this from your own figures.
How do you calculate cash-on-cash return?
Take the year’s cash flow, which is net operating income minus a year of loan payments, and divide it by the cash you put in: the down payment, your closing costs and any work at purchase. The cash on cash return calculator above shows each step.
What is the difference between cap rate and cash-on-cash return?
The cap rate measures the property: it ignores the loan, so it is the same however you pay for it. Cash-on-cash return measures your money: it counts the loan payment and the cash you put in, so the same property gives a different return with a different loan or down payment.
What is a good cap rate?
There is no single figure. Cap rates differ by market, property type, condition and the tenants’ risk, and they move as prices and rents change. Compare a property with similar ones nearby, and test your own costs and allowances, rather than aim for one number.
What should I enter for vacancy and repairs?
Your own estimates, based on the property and the area: how long units sit empty between tenants, how old the roof, systems and appliances are, and what a manager would charge. The calculator suggests no figure, so you can try a cautious case and a hopeful case side by side.
How is this different from the DSCR calculator and the rental deal analyzer?
This calculator looks at the property’s own numbers: its operating costs, net operating income and cap rate. The DSCR calculator compares the rent with the full loan payment, the way a DSCR lender looks at it, and the rental deal analyzer works out the payment from your price, down payment, rate and term.
What do these returns leave out?
Income taxes and depreciation, the loan balance going down, any change in the property’s value, reserves you keep aside, and costs to sell. They are a starting point for comparing properties, not a full forecast.
Is anything I type saved or sent?
No. The calculator runs in your browser. Nothing you type is sent to us, saved, or added to the page address, and closing the page clears it. To talk a property through, call 732-686-9999 or start a quote.
Have a rental in mind?
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This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, property, rent and underwriting review and are subject to change without notice. Business purpose investor loans are for investment property.
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