Rental ROI & Cap Rate Calculator
Calculates core real estate investment metrics—including Gross Scheduled Income, vacancy loss (5%), operating expenses (property taxes, insurance, maintenance, property management ~35%–40%), Net Operating Income (NOI), Capitalization Rate (Cap Rate %), and Cash-on-Cash Return.
Formula
NOI = (Gross Rent × 12 × 0.95) - Operating Expenses; Cap Rate = (NOI ÷ Purchase Price) × 100
1. Gross Annual Scheduled Rent = Monthly Rent × 12 2. Effective Gross Income (EGI) = Gross Annual Rent × (1 - 0.05 Vacancy) 3. Operating Expenses = Property Taxes + Insurance + Maintenance Reserve (8% of rent) + Property Management (8% of rent) 4. Net Operating Income (NOI) = EGI - Operating Expenses 5. Capitalization Rate (Cap Rate %) = (NOI ÷ Purchase Price) × 100 6. Annual Mortgage Debt Service (at 6.8% rate on loan balance) 7. Cash Flow = NOI - Annual Debt Service 8. Cash-on-Cash Return (%) = (Annual Cash Flow ÷ Total Cash Invested) × 100
Inputs
- Property Purchase Price ($)
- Expected Monthly Gross Rent ($)
- Annual Property Taxes ($)
- Annual Hazard / Landlord Insurance ($)
- Down Payment Percentage (%)
Worked example
Calculating NOI, Cap Rate, and Cash-on-Cash Return with 20% down.
Outcome: Effective Gross Income is $31,920/yr (with 5% vacancy). Total operating expenses are $11,067/yr (taxes, insurance, 8% maintenance, 8% management). Net Operating Income (NOI) is $20,853/year, yielding a 5.96% Cap Rate. With 20% down ($70,000 cash invested), generates ~$3,850 annual cash flow after mortgage debt service (5.5% Cash-on-Cash return).
What is considered a "good" Cap Rate for a residential rental property?
In most US markets, a residential Cap Rate between 5.5% and 8.0% is considered healthy. High-growth coastal markets often trade at lower cap rates (4% to 5%) due to strong long-term property appreciation, while Midwest cash-flow markets often yield 8% to 10% cap rates.