Real Estate Investment Calculator
Analyze rental property investments with our comprehensive calculator. Calculate cash flow, ROI, cap rate, and total returns including appreciation.
Real Estate Investment Calculator
Analyze rental property cash flow and returns
Property Details
Tax, insurance, maintenance
1% Rule: Monthly rent should be at least 1% of purchase price for good cash flow.
📚 Learn About Real Estate Investing
💰 Cash Flow Basics
Cash flow = rental income minus all expenses (mortgage, taxes, insurance, maintenance, vacancy, property management). Positive cash flow means profit each month. Aim for at least $200-300/month per property.
Example: $2,000 rent - $1,700 expenses = $300/month positive cash flow.
📊 Cap Rate (Capitalization Rate)
Cap Rate = (Annual Net Operating Income ÷ Property Value) × 100. Measures property's return independent of financing. Higher cap rate = better return, but often higher risk.
Example: $24k annual NOI ÷ $300k value = 8% cap rate. Good cap rates: 8-12%.
📏 The 1% Rule
Monthly rent should be at least 1% of purchase price for good cash flow. This is a quick screening tool, not a guarantee. Adjust for high-cost areas (0.7-0.8% may work).
Example: $200k property should rent for $2,000/month (1%). $1,600 = 0.8% (marginal).
🏠 Operating Expenses
- Property Tax: 1-2% of value annually
- Insurance: $800-1,500/year
- Maintenance: 1% of value annually
- Vacancy: 5-10% of annual rent
- Property Management: 8-10% of rent
- CapEx Reserve: $200-300/month (roof, HVAC, etc.)
📈 ROI vs Cash-on-Cash Return
Annual cash flow ÷ total cash invested. Measures return on your actual money.
Includes cash flow, appreciation, loan paydown, and tax benefits.
⚠️ Common Mistakes
- Underestimating maintenance and repairs (budget 1% of value)
- Ignoring vacancy (always budget 5-10%)
- Forgetting CapEx (roof, HVAC, water heater)
- Overestimating rent (research comps carefully)
- Not screening tenants properly (costly evictions)
- Buying in declining neighborhoods (appreciation matters)
How to Use This Real Estate Calculator
Enter Property Details
Input purchase price, down payment, interest rate, and expected monthly rental income.
Add All Expenses
Enter property taxes, insurance, maintenance, vacancy rate, and property management fees.
Analyze Returns
Review monthly cash flow, cap rate, ROI, and total returns including appreciation.
Frequently Asked Questions
What is a good cap rate for rental property?
A good cap rate typically ranges from 8-12%, but this varies by location and property type. Higher cap rates (10-12%+) indicate better returns but often come with higher risk or less desirable locations. Lower cap rates (4-6%) are common in expensive markets like San Francisco or New York, where investors bet on appreciation. Class A properties in prime locations: 4-6%. Class B properties in good areas: 6-8%. Class C properties or emerging markets: 8-12%+. Don't chase high cap rates without understanding the risks.
How much should I budget for rental property expenses?
Budget 40-50% of gross rent for operating expenses (excluding mortgage). This includes: property taxes (1-2% of value), insurance ($800-1,500/year), maintenance (1% of value), vacancy (5-10% of rent), property management (8-10% of rent), and CapEx reserves ($200-300/month for major repairs). For example, on $2,000/month rent, budget $800-1,000 for expenses. New investors often underestimate these costs and end up with negative cash flow.
What is the 1% rule in real estate investing?
The 1% rule states that monthly rent should equal at least 1% of the purchase price for good cash flow potential. For example, a $200,000 property should rent for $2,000/month. This is a quick screening tool to identify properties worth analyzing further. In expensive markets (California, New York), 0.7-0.8% may be acceptable if you're betting on appreciation. In cheaper markets (Midwest, South), you can often find 1.5-2% properties. The 1% rule doesn't guarantee profitability - always do detailed cash flow analysis.
Should I manage the property myself or hire a property manager?
Property managers typically charge 8-10% of monthly rent plus leasing fees. Self-managing saves money but requires time for tenant screening, maintenance coordination, rent collection, and dealing with issues. Hire a manager if: (1) you live far from the property, (2) you have multiple properties, (3) you value your time highly, or (4) you lack landlord experience. Self-manage if: you live nearby, have only 1-2 properties, enjoy the work, and want to maximize cash flow. Many investors start self-managing to learn, then hire managers as they scale.