Rental yield & cap rate calculator
Four numbers decide whether a rental deal works: gross yield, cap rate, monthly cash flow, and cash-on-cash return. This calculator produces all four from one set of inputs — including the mortgage, which most simple yield calculators ignore.
Rental yield, cap rate & cash flow calculator
Financing (leave down payment at 100 for a cash purchase)
| Gross yield | annual rent ÷ purchase price | |
| Net operating income (NOI) | rent − vacancy − operating expenses | |
| Cap rate | NOI ÷ purchase price | |
| Monthly mortgage (P&I) | ||
| Monthly cash flow | after mortgage | |
| Cash-on-cash return | annual cash flow ÷ cash invested |
Frequently asked questions
What is a good cap rate for a rental property?
Most residential rentals in the US trade at cap rates between 4% and 8%. Below 4% you're betting on appreciation; above 8% usually signals higher risk (location, condition, tenant base). Compare against local market cap rates rather than a universal number.
What is the difference between cap rate and cash-on-cash return?
Cap rate ignores financing: NOI ÷ purchase price, as if you paid cash. Cash-on-cash measures the return on the actual cash you put in (down payment + closing costs) after mortgage payments — it's what your money really earns when leveraged.
What counts as operating expenses?
Property taxes, insurance, maintenance and repairs, property management fees, HOA dues, utilities you pay, and a vacancy allowance. The mortgage is NOT an operating expense — it's financing, which is why cap rate excludes it.
What is the 1% rule?
A screening shortcut: monthly rent should be at least 1% of purchase price ($3,000 rent on a $300,000 property). Few properties pass it in 2026's market — treat it as a filter for further analysis, not a verdict.
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