Rental Property Calculator
Analyze rental property cash flow, cap rate, cash-on-cash return, and investment metrics.
Property & Financing
Rental Income
Operating Expenses
Net Cash Flow
$85
Rent should be ≥1% of price ($2,000)
Operating expenses: 33% of rent
Additional Metrics
Related Calculators
About This Calculator
With multifamily cap rates averaging 5.31% in 2026 and interest rates remaining elevated, the margin between profitable and unprofitable rental properties has never been thinner. Nearly 56% of Americans feel anxious about retirement savings, yet rental property remains one of the most reliable wealth-building vehicles—if you run the numbers correctly. This Rental Property Calculator analyzes investment properties for cash flow, cap rate, cash-on-cash return, and DSCR with precision.
Enter your property details to see the complete financial picture: monthly cash flow after all expenses, capitalization rate, cash-on-cash return, debt service coverage ratio, and compliance with investor rules like the 1% and 50% guidelines. In 2025-2026, many landlords target cash-on-cash returns between 8-12%, but with current interest rates (7%+ for investment properties), hitting the higher end requires either significant down payments or properties in high-yield markets.
According to All Property Management, rental demand remains strong in most U.S. markets, but positive monthly cash flow is harder to achieve than in recent years. The investors succeeding in 2026 are those who analyze deals thoroughly, understand true operating costs, and don't rely on appreciation alone. Use this calculator to separate good deals from money pits.
How to Use the Rental Property Calculator
- 1Enter the purchase price and your down payment percentage (typically 20-25% for investment properties).
- 2Input loan terms: interest rate (currently 7-8% for investment properties in 2026) and loan term.
- 3Add expected monthly rent—verify with local comparables using Zillow, Rentometer, or actual listings.
- 4Set vacancy rate (5-8% for stable markets, 10%+ for turnover-heavy or seasonal areas).
- 5Enter all operating expenses: property taxes, insurance, maintenance reserve, and property management.
- 6Review the results: monthly cash flow, cap rate, cash-on-cash return, and DSCR.
- 7Test scenarios by adjusting purchase price, rent, or down payment to find your sweet spot.
Formula
Cash Flow = Rental Income - Operating Expenses - Mortgage PaymentThis fundamental formula determines monthly cash flow—the money left in your pocket after all expenses. Operating expenses include property taxes, insurance, maintenance, vacancy allowance, property management, and any HOA fees. Mortgage payment (principal and interest) is separate from operating expenses for calculating NOI (Net Operating Income), but must be subtracted for actual cash flow. A positive number means the property pays you; a negative number means you're feeding the property from other income.
2026 Rental Market Reality Check
Current Market Conditions (January 2026)
The rental investment landscape has shifted dramatically from the 2020-2021 boom. Here's what the data shows:
Cap Rate Trends (Statista):
| Year | Multifamily Cap Rate | Market Condition |
|---|---|---|
| 2021 | 3.82% | Historic low—peak pricing |
| 2022 | 4.45% | Rising rates begin |
| 2023 | 5.96% | Rate shock—values decline |
| 2024 | 5.60% | Stabilization begins |
| 2026 (Forecast) | 5.31% | Modest compression |
Cap Rates by Property Class (2025-2026):
| Class | Cap Rate | Characteristics |
|---|---|---|
| A (Luxury) | 4.74% | New construction, prime locations |
| B (Workforce) | 4.92% | Solid properties, good areas |
| C (Value-Add) | 5.38% | Older properties, appreciation potential |
Target Returns for Investors:
- Cash-on-cash return: 8-12% target
- IRR (Internal Rate of Return): 7.70% typical target
- DSCR (Debt Service Coverage): 1.25+ required by most lenders
The 2026 Investor Reality: With investment property rates at 7-8% and cap rates at 5-6%, achieving positive cash flow requires either:
- Larger down payments (25-30%+)
- Below-market purchase prices
- Above-market rents
- Value-add improvements
"Easy" cash-flowing deals are rare—successful investors work harder or accept appreciation-focused strategies.
The Key Formulas Explained
Net Operating Income (NOI): NOI = Gross Rental Income - Operating Expenses
- Does NOT include mortgage payment
- This is the property's "earning power"
- Used for cap rate calculation
Capitalization Rate (Cap Rate): Cap Rate = (Annual NOI / Property Price) × 100
Example: $12,000 NOI on $200,000 property = 6% cap rate
| Cap Rate | Interpretation | Typical Markets |
|---|---|---|
| 3-5% | Low yield, high appreciation | Coastal, major metros |
| 5-7% | Balanced | Suburbs, secondary cities |
| 7-10% | High yield, less appreciation | Midwest, South |
| 10%+ | Very high yield, higher risk | Tertiary markets |
Cash-on-Cash Return: CoC = (Annual Cash Flow / Total Cash Invested) × 100
Example: $4,800 annual cash flow on $50,000 invested = 9.6% CoC
This is YOUR return on YOUR money—the metric most investors prioritize.
DSCR (Debt Service Coverage Ratio): DSCR = Annual NOI / Annual Mortgage Payments
| DSCR | Interpretation |
|---|---|
| Below 1.0 | Negative cash flow—danger |
| 1.0-1.25 | Break-even to marginal |
| 1.25-1.5 | Healthy—meets lender requirements |
| 1.5+ | Strong—comfortable cushion |
Most lenders require DSCR of 1.25 minimum for investment property loans.
Gross Rent Multiplier (GRM): GRM = Property Price / Annual Gross Rent
Lower GRM = better value. Typical range: 8-15x depending on market.
The 1% Rule and 50% Rule
The 1% Rule (Quick Screening)
Monthly rent should be at least 1% of purchase price:
- $150,000 property → $1,500+/month rent
- $250,000 property → $2,500+/month rent
- $400,000 property → $4,000+/month rent
2026 Reality: The 1% rule is extremely difficult to find in most markets. According to market data:
| Market Type | 1% Rule Availability |
|---|---|
| Major coastal cities | Virtually impossible (<0.5%) |
| Suburban metros | Rare (0.5-0.7%) |
| Midwest cities | Achievable (0.8-1.2%) |
| High-yield markets | Common (1.0-1.5%) |
Markets where the 1% rule is still possible: Cleveland, Detroit, Indianapolis, Memphis, Birmingham, St. Louis, Kansas City.
The 50% Rule (Expense Estimation)
Operating expenses typically equal 50% of gross rent:
- Rent: $2,000/month
- Expenses: $1,000/month (estimated)
- NOI: $1,000/month
What the 50% Includes:
- Property taxes
- Insurance
- Maintenance and repairs
- Vacancy (5-10%)
- Property management (8-12%)
- Utilities (if landlord-paid)
- CapEx reserve
What 50% Does NOT Include:
- Mortgage payment (P&I)
- Your time
- Initial rehab costs
Using Both Rules Together: $200,000 property with $2,000/month rent (passes 1% rule):
- 50% rule: $1,000/month expenses
- NOI: $1,000/month
- Mortgage (20% down, 7.5%, 30yr): $1,118/month
- Cash flow: -$118/month
Even "1% deals" can be negative cash flow at current interest rates. Always run full numbers.
Operating Expenses Breakdown
True Operating Costs by Category
Many new investors underestimate expenses. Here's a realistic breakdown:
Property Taxes:
- Varies dramatically by location
- Range: 0.5% to 2.5% of property value annually
- $200,000 property: $1,000 to $5,000/year
- Check exact amounts before purchasing
Insurance:
- Landlord policy: $800-$2,000/year typical
- Higher in flood/hurricane zones
- Umbrella liability recommended: $200-400/year
- Consider rent loss coverage
Maintenance and Repairs:
- Budget: 5-10% of gross rent
- Or: $1 per square foot per year
- New properties: 5%
- 30+ year old properties: 10-15%
- Include: HVAC service, plumbing, appliances, turnover
Capital Expenditures (CapEx):
| Item | Lifespan | Replacement Cost |
|---|---|---|
| Roof | 20-25 years | $8,000-15,000 |
| HVAC | 15-20 years | $5,000-10,000 |
| Water Heater | 10-15 years | $800-1,500 |
| Appliances | 10-15 years | $2,000-4,000 |
| Flooring | 10-20 years | $3,000-8,000 |
Monthly CapEx Reserve: Typically $100-200/month
Vacancy:
| Market Type | Vacancy Rate |
|---|---|
| High-demand urban | 3-5% |
| Stable suburban | 5-8% |
| Average market | 8-10% |
| High turnover | 10-15% |
Property Management:
- Full service: 8-12% of collected rent
- Leasing fee: 50-100% of first month's rent
- Self-management: $0 (but costs your time)
Complete Expense Example ($2,000/month rent):
| Expense | Monthly | Annual |
|---|---|---|
| Taxes | $250 | $3,000 |
| Insurance | $100 | $1,200 |
| Maintenance (7%) | $140 | $1,680 |
| CapEx Reserve | $150 | $1,800 |
| Vacancy (8%) | $160 | $1,920 |
| Management (10%) | $200 | $2,400 |
| Total | $1,000 | $12,000 |
This equals exactly 50%—validating the 50% rule.
Cash Flow Analysis Examples
Example 1: Cash Flow Positive (Midwest Market)
Property: 3BR/2BA single-family, Indianapolis
- Purchase price: $180,000
- Down payment: $45,000 (25%)
- Loan: $135,000 at 7.5% for 30 years
- Monthly rent: $1,600
| Item | Monthly | Annual |
|---|---|---|
| Gross Rent | $1,600 | $19,200 |
| Vacancy (5%) | -$80 | -$960 |
| Effective Rent | $1,520 | $18,240 |
| Property Taxes | -$175 | -$2,100 |
| Insurance | -$85 | -$1,020 |
| Maintenance | -$120 | -$1,440 |
| CapEx Reserve | -$100 | -$1,200 |
| Management | -$152 | -$1,824 |
| NOI | $888 | $10,656 |
| Mortgage (P&I) | -$944 | -$11,328 |
| Cash Flow | -$56 | -$672 |
Analysis:
- Cap Rate: 5.92%
- Cash-on-Cash: -1.5%
- DSCR: 0.94
This deal is slightly negative—common in 2026 with high rates. The 25% down payment isn't enough.
Example 2: Self-Managed, Lower-Cost Market
Property: Duplex, Cleveland
- Purchase price: $140,000
- Down payment: $35,000 (25%)
- Loan: $105,000 at 7.5%
- Monthly rent: $1,800 (both units)
| Item | Monthly | Annual |
|---|---|---|
| Gross Rent | $1,800 | $21,600 |
| Vacancy (8%) | -$144 | -$1,728 |
| Effective Rent | $1,656 | $19,872 |
| Operating Expenses | -$660 | -$7,920 |
| NOI | $996 | $11,952 |
| Mortgage | -$734 | -$8,808 |
| Cash Flow | $262 | $3,144 |
Analysis:
- Cap Rate: 8.5%
- Cash-on-Cash: 9.0%
- DSCR: 1.36
- Passes: 1% rule (1.29%), DSCR test
This is a solid 2026 deal with realistic expectations.
Investment Strategies for 2026
Strategy 1: Value-Add Investing
Buy underperforming properties, improve them, raise rents:
- Target: Properties 10-20% below market rent
- Investment: $10-30K in renovations
- Result: Forced appreciation + increased cash flow
Example:
- Buy: $200,000 (below-market rents at $1,400)
- Renovate: $20,000 (new kitchen, paint, flooring)
- New rent: $1,800 (+$400/month)
- New value: $240,000 (based on higher NOI)
- Equity created: $20,000+ (plus renovation cost)
Strategy 2: House Hacking
Live in one unit, rent others:
- Owner-occupied financing: 3.5-5% down (FHA)
- Lower interest rates (6-7% vs 7-8%)
- Reduced or eliminated housing cost
Example: 4-plex purchase
- Price: $400,000
- Down: $14,000 (3.5% FHA)
- Live in 1 unit, rent 3 at $1,200 each
- Rental income: $3,600/month
- Your housing cost: Significantly reduced or free
Strategy 3: BRRRR (Buy, Rehab, Rent, Refinance, Repeat)
- Buy distressed property below market
- Rehab to market condition
- Rent at market rate
- Refinance at new (higher) appraised value
- Repeat with pulled-out equity
Requires: significant renovation expertise, cash/hard money for initial purchase, patience for refinance seasoning.
Strategy 4: Turnkey Investing
- Buy fully renovated, tenant-placed properties
- Often from specialized turnkey providers
- Markets: Memphis, Cleveland, Indianapolis, Birmingham
- Trade-off: Lower returns but hands-off
2026 Turnkey Returns:
- Cap rates: 6-8%
- Cash-on-cash: 4-8%
- Lower than DIY but requires less time/expertise
Strategy 5: Short-Term Rentals (Airbnb)
Higher income potential but:
- More management-intensive
- Regulatory risk (many cities restricting)
- Higher vacancy and turnover
- Furnishing costs
2026 Reality: Many STR markets are saturated. Research carefully.
Best Markets for Rental Investing in 2026
High Cash Flow Markets (1%+ Rule Achievable)
| Market | Median Home | Median Rent | Ratio | Cap Rate |
|---|---|---|---|---|
| Cleveland, OH | $120,000 | $1,200 | 1.0% | 7-9% |
| Detroit, MI | $95,000 | $1,000 | 1.05% | 8-10% |
| Indianapolis, IN | $180,000 | $1,500 | 0.83% | 6-8% |
| Memphis, TN | $160,000 | $1,400 | 0.88% | 7-9% |
| Birmingham, AL | $140,000 | $1,200 | 0.86% | 7-9% |
| St. Louis, MO | $170,000 | $1,400 | 0.82% | 6-8% |
Balanced Markets (Appreciation + Cash Flow)
| Market | Median Home | Growth Outlook | Cap Rate |
|---|---|---|---|
| Tampa, FL | $350,000 | Strong | 5-6% |
| Phoenix, AZ | $420,000 | Moderate | 5-6% |
| Dallas, TX | $380,000 | Strong | 5-6% |
| Charlotte, NC | $380,000 | Strong | 5-6% |
| Raleigh, NC | $400,000 | Strong | 5-6% |
Appreciation Markets (Negative/Low Cash Flow)
| Market | Median Home | Why Invest |
|---|---|---|
| Austin, TX | $450,000 | Tech growth, population influx |
| Nashville, TN | $420,000 | Strong job growth |
| Miami, FL | $500,000+ | International demand |
These require large down payments or acceptance of negative cash flow.
Short-Term Rental Top Markets (Lodgify):
- Springfield, IL: 8.02% cap rate, $147,350 median price
- Best for vacation/tourism focused investing
Key Selection Factors:
- Population growth (net positive migration)
- Job market diversity
- Landlord-friendly laws
- Property tax rates
- Insurance costs
- Rent-to-price ratio
Pro Tips
- 💡Always verify rent estimates with actual comparables—check Zillow, Rentometer, Craigslist, and local property managers. Overestimating rent by $100/month means $1,200/year less cash flow.
- 💡In 2026's high-rate environment, run numbers at different down payment levels. Often 25-30% down transforms negative cash flow deals into positive ones.
- 💡Don't rely on appreciation—treat it as a bonus. Cash flow pays the bills during market downturns; appreciation doesn't pay the mortgage.
- 💡Build 6+ months of reserves before buying your first rental. One major repair or extended vacancy can wipe out a year of profits without reserves.
- 💡Screen tenants thoroughly: verify income (3x rent minimum), check credit and rental history, call previous landlords. One bad tenant costs thousands.
- 💡Know your local landlord-tenant laws before investing. Some states (California, New York) heavily favor tenants with long eviction timelines.
- 💡Consider DSCR loans if your personal income doesn't qualify for traditional financing. They qualify based on property cash flow, not your W-2.
- 💡The 50% rule is an estimate—always verify real expenses. Property taxes vary dramatically by state and can make or break a deal.
- 💡Self-management works for your first 1-3 local properties. Beyond that, property management is usually worth the 10% for time and scalability.
- 💡Track everything in year one: actual vacancy, repairs, and expenses. Compare to projections and adjust your analysis model for future deals.
Frequently Asked Questions
In 2026, cap rates have normalized from 2021 lows. According to Statista, multifamily cap rates average 5.31% (forecast). By property class: A-class properties average 4.74%, B-class 4.92%, and C-class 5.38%. What's "good" depends on your strategy—appreciation-focused investors accept 4-5% in growing markets, while cash flow investors target 7-10% in Midwest/Southern markets. Higher cap rates often correlate with higher risk (older properties, less desirable locations).
