See a rental's cap rate and the cash-on-cash return on the money you put in.
A rental property return calculator estimates a rental's cap rate and cash-on-cash return, the two figures investors use to judge whether an income property pays.
Cap rate is net operating income divided by the purchase price, the unleveraged yield, useful for comparing properties. Cash-on-cash divides your annual pre-tax cash flow by the actual cash you invested (mainly the down payment), so it reflects the effect of the mortgage. A property can have a modest cap rate but a strong cash-on-cash return thanks to leverage.
These ratios exclude appreciation, principal paydown, tax benefits like depreciation, and the reality of vacancies and surprise repairs. Operating expenses on a rental commonly run 35-50% of rent once you include taxes, insurance, management, and maintenance. Use the calculator to screen deals, then stress-test with realistic vacancy and expense assumptions before buying.
It varies by market and property type, often in the mid-single digits. Compare a property's cap rate to similar local properties rather than a universal number.
Cap rate is unleveraged yield (NOI ÷ price); cash-on-cash is annual cash flow ÷ cash invested, which reflects the mortgage.
Often 35-50% of rent, covering taxes, insurance, management, maintenance, and vacancy, before the mortgage.
See the exact formula and a worked example on our methodology page.