Free investment property calculator
Analyze a rental property investment — cap rate, cash-on-cash return, NOI, and monthly cash flow based on purchase price and expenses, updated live, as you type.
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Does not include capital expenditures, vacancy surprises, or tax benefits. Consult a real estate professional for investment decisions.
Results are estimates. Consult a professional.
How the investment property calculator works
Real estate investors use a handful of ratios to evaluate deals quickly. This calculator computes the five most important: net operating income (NOI), cap rate, cash-on-cash return, gross rent multiplier (GRM), and annual cash flow. Each metric answers a different question — about value, yield, leverage, and liquidity — so seasoned investors look at all five together rather than in isolation.
Operating expenses typically include property management (8–10% of rent), maintenance and repairs, property taxes, insurance, and reserves for capital expenditures. They do NOT include mortgage payments — debt service is handled separately so that NOI and cap rate remain financing-neutral metrics.
National Association of Realtors — Investment & Vacation Home Buyers SurveyWorked example: $400k rental property
Jordan is evaluating a $400,000 single-family rental. The going rent is $3,000/month ($36,000/year). Vacancy is estimated at 5%. Annual operating expenses (management, taxes, insurance, maintenance, reserves) total $12,000. Jordan plans to put 20% down ($80,000) and finance the rest at 7%, 30-year.
Cap rate by property price and gross rent
The table below shows approximate cap rates using a 40% expense ratio (operating expenses = 40% of gross rent). Vacancy is excluded — adjust the NOI downward 5–10% for a more conservative estimate.
| Gross Monthly Rent | $300k Property | $400k Property | $500k Property |
|---|---|---|---|
| $1,800 / mo | 4.32% | 3.24% | 2.59% |
| $2,200 / mo | 5.28% | 3.96% | 3.17% |
| $2,800 / mo | 6.72% | 5.04% | 4.03% |
| $3,500 / mo | 8.40% | 6.30% | 5.04% |
Source: National Association of Realtors. Assumes 40% expense ratio, 0% vacancy. Cap rate = NOI / property value.
Tips for evaluating investment properties
The numbers only tell part of the story. Here are five principles experienced real estate investors use to stress-test a deal before committing.
- Use the 1% rule as a quick screen — A property passes the 1% rule if monthly rent ≥ 1% of purchase price (e.g., $3,000 rent on a $300k property). It is a rough filter, not a guarantee, but it quickly eliminates overpriced deals.
- Never underestimate expenses — New investors routinely use 25–30% expense ratios. Experienced owners budget 40–50% to account for vacancies, turnovers, unexpected repairs, and capital expenditure reserves.
- Stress-test with a higher vacancy rate — Model vacancy at 8–10% even in strong rental markets. If the deal only works at 2% vacancy, one bad tenant cycle can wipe out a year of gains.
- Compare cap rate to local alternatives — A 5% cap rate is attractive if 10-year Treasuries yield 3%, but less so if they yield 5%. Always evaluate cap rate relative to the risk-free rate and comparable properties in the same market.
- Model appreciation conservatively — Do not bank on appreciation to make a negative-cash-flow deal work. Underwrite to cash-flow neutral or positive so the property sustains itself if prices stagnate.
Accuracy and limitations
This calculator uses standard commercial real estate underwriting formulas. Results depend entirely on the accuracy of rent, vacancy, and expense inputs. Actual expenses vary significantly by property age, location, and management approach. The calculator does not model depreciation tax benefits, principal paydown, or equity appreciation — factors that can substantially change the investment's total return.
Not financial advice — consult a real estate professional for your specific situation.
Investment property terms defined
About this investment property calculator
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