Rental Property Calculator
Analyze cap rate, cash flow, COC return, DSCR, and the 1% rule for any rental property investment.
Purchase & Financing
Income
Monthly Expenses
Monthly Cash Flow Breakdown
Cap Rate
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Cash-on-Cash
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DSCR
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GRM
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Partner offers — Disclosure
Rental Property Analysis: Key Metrics Explained
Cap Rate
Cap rate (capitalization rate) = Annual NOI ÷ Purchase Price. It measures return assuming an all-cash purchase. A 5–8% cap rate is typical in most US markets. Higher cap rates signal more risk or lower demand. Use cap rate to compare properties — not to evaluate leverage.
Cash-on-Cash Return
COC = Annual Pre-Tax Cash Flow ÷ Total Cash Invested. This is the metric that matters most for leveraged investors — it measures return on actual dollars you put in. Target 6–12% COC for a solid rental property.
Debt Service Coverage Ratio (DSCR)
DSCR = Monthly NOI ÷ Monthly Mortgage Payment. Lenders use this to qualify DSCR loans. A DSCR ≥ 1.25 is typically required. Below 1.0 means the property doesn't cover its own debt from rent alone.
The 1% Rule
Monthly rent ÷ Purchase price ≥ 1%. A $300,000 property should rent for $3,000+/month to pass. Useful as a quick screen, but not sufficient analysis on its own — always run full expense projections.
The 50% Rule (Sanity Check)
Operating expenses (excluding mortgage) typically run 40–50% of gross rent. If your projected expenses are significantly lower, you may be underestimating maintenance, vacancies, or capital expenditures.
Frequently Asked Questions
What is a good cap rate for rental property?
5–10% is generally good. In major cities 3–5% is common. In secondary markets 7–10% is achievable. Always benchmark against comparable properties in the same market.
What is the 1% rule in real estate?
Monthly rent ≥ 1% of purchase price. A $200,000 home should rent for $2,000/month. It's a screening tool — not a guarantee of positive cash flow.
What is cash-on-cash return?
Annual pre-tax cash flow divided by total cash invested (down payment + closing costs). A 6–12% COC is considered solid. It measures return on YOUR money specifically.
What is DSCR and why does it matter?
Debt Service Coverage Ratio = NOI ÷ Annual Debt Service. Lenders typically require ≥ 1.25. Below 1.0 means rent doesn't cover the mortgage.
What expenses should I include?
Property tax, insurance, property management (8–12%), vacancy (5–10%), maintenance (1% of value/year), CapEx reserves, HOA, and repairs. Use the 50% rule as a sanity check.
How do I calculate rental property cap rate?
Cap Rate = (Annual Gross Rent − Operating Expenses) ÷ Property Value × 100. Excludes mortgage — pure property performance metric.
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