Rental Property Calculator

Created by Bogna Szyk
Reviewed by Dominik Czernia, PhD candidate and Jack Bowater
Last updated: Nov 16, 2021

The rental property calculator is a more elaborate variation of our cap rate calculator. In short, it's a tool that allows you to analyze any real estate investment to decide whether it will be profitable.

In this article, we will explain in detail every parameter that can influence your investment and teach you how to calculate the ROI on a rental property.

Investment in a property – rental property calculator

The first part of the calculator, called the purchase, focuses solely on your initial investment. This is the money that needs to be pumped into your rental property before it will begin to bring in any profit. Our real estate investment calculator also gives you the option to take a loan for this purpose.

  • Purchase price — This is the total of all costs you need to bear in order to buy the property. Make sure to include all accompanying expenses, such as the commission.
  • Down payment — The money that you put on the table immediately. This money doesn't come from the loan – it is your initial investment.
  • Loan amount — The total sum of your loan. You will have to repay this sum plus interest to the bank.
  • Loan term — How long it will take to repay the loan. Typical loans are taken out for about 20 years.
  • Interest — Quite straightforwardly, this is the interest of the loan determined by the bank.
  • Total paid — The total sum you will return to the bank, both principal payment and interest.

Upkeep and monthly expenses

The next section of the investment property calculator deals with the expenses that you have to pay every month. If your costs are annual, you can always change the units of time in the drop-down list.

  • Property tax — The tax you have to pay is calculated based on your property's value. It doesn't depend on the rent or the value of the mortgage.
  • Insurance — Insurance against the most common occurrences, such as fire, theft, weather damage, and explosions.
  • Maintenance — The cost of keeping the property in good shape and all necessary repairs.
  • HOA fee — If you are a member of the Homeowners Association (HOA), you have to pay a fee to cover repair and maintenance costs.
  • Other costs — All other expenses you need to cover each month or each year.

Your rental property income

After assessing the expenses, it is about time to start thinking about your income — after all, this is what you came here for. Your income will generally come from rent. Our rental income calculator has three fields that you should take into account:

  • Rent — The gross rental income you will receive from all your tenants each month.
  • Vacancy rate — This measures how often the property stays unoccupied, and therefore no rent is collected.
  • Management fee — If you don't manage the property yourself but hire someone to do that for you, you will typically need to cover a management fee depending on the rent.

Selling the property

The next step is to determine your income from returning the property to the market. You need to fill out the following fields of the rental property calculator:

  • Value appreciation — Typically, each property gains value in time. You should input an annual percentage increase of this value in this field.
  • Holding period — The time after which you will sell this property, measured in years.
  • Selling price — The selling price will be calculated automatically. This is the theoretical price for which you should be able to sell your property. If you know the selling price, input the value directly into this field.

Real estate investment evaluation – how to calculate ROI on rental property?

Our rental income calculator automatically generates a summary of all important data for your investment. But what do these values actually mean?

  • Loan payment — The monthly (or annual) payment you need to make to pay off your mortgage.
  • Other costs — All other costs, excluding the mortgage.
  • Gross income — All the money you receive from your tenants, taking into consideration only the vacancy rate and the management fee.
  • Cash flow — Gross income after subtracting the mortgage payment and the maintenance costs. This is the actual amount of money that ends up in your pocket at the end of each period.
  • NOI — Net Operational Income. It is equal to the gross income diminished by all the operational costs. The mortgage costs are not taken into consideration here.
  • Cash-on-cash return — Also called the annual yield, it is the ratio of the amount invested (down payment) and the cash flow. The higher it is, the better!
  • Cap rate — This value describes what part of the property purchase value you will receive in net income every year. You calculate it by dividing the Net Operating Income (NOI) by the property value.

💡 Pay special attention to the last two numbers: cash-on-cash return and cap rate. Based on these results in the rental property calculator, you can decide whether your investment is sufficiently profitable.

Bogna Szyk
Purchase
Purchase price
$
Down payment
$
Loan amount
$
Loan term
yrs
mos
Interest rate
%
Total paid
$
Recurring expenses
Property tax
$/
per month
Insurance
$/
per month
Maintenance/repairs
$/
per month
HOA fee
$/
per month
Other costs
$/
per month
Income
Rent
$/
per month
Vacancy rate
%
Management fee
%
Selling the property
Value appreciation
%
/year
Holding period
yrs
mos
Selling price
$
Cash flow summary
Loan payment
$/
per month
Other costs
$/
per month
Gross income
$/
per month
Cash flow
$/
per year
NOI
$/
per month
Return on your investment
Cash-on-cash return
%
Cap rate
%
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