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Rental Property Calculator

See a rental property’s cash flow, gross and net yield, and the return on the cash you put in, after the mortgage and running costs in US.

$
$
$

A month

%
More options· Running costs, empty weeks and buying costs
%

% of the year

%

% of rent

%

% of price a year

$

A year

$

A year

$

A month

%

Taxes and fees, % of price

It costs you

$522/mo

Rent left after the mortgage and running costs, before tax

Gross yield
8.2%
Net yield
4.7%

What this means

You’d top it up by $522 a month. It would pay for itself at a rent of about $2,991 a month. On the $98,000 you put in, that’s a -6.4% cash return in the first year, before any rise in the property’s value.

Rental income is taxed after expenses and depreciation, which often cuts the tax a lot.

Next step

The first year

Rent collected$27,648
Property management−$2,212
Repairs and upkeep−$3,500
Insurance−$1,800
Property tax−$3,850
Mortgage payments−$22,545
Cash flow-$6,259

What the numbers mean

  • Gross yield: a year’s rent as a share of the price. Quick to compare, but ignores costs.
  • Net yield: rent after running costs, before the mortgage.
  • Cash return: cash flow as a share of the deposit and buying costs you put in.
Assumptions in this estimate
  • The first year only, before tax. Rents, rates and costs change, and you’ll also gain or lose as the property’s value changes.
  • Mortgage payments include paying off the loan on a repayment mortgage: that part builds your equity rather than being a cost.
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How the calculator works

  1. Price, deposit and mortgage rate, and whether the mortgage is repayment or interest-only.
  2. Rent, and the share of the year it might be empty.
  3. Running costs: management, repairs, insurance, property tax or rates, and any strata or service charges.

Example

A $350,000 home with $87,500 down at 7.74% over 30 years, renting for $2,400 a month, in its first year:

A year Amount
Rent collected (empty 4% of the year) $27,648
Property management −$2,212
Repairs and upkeep −$3,500
Insurance −$1,800
Property tax −$3,850
Mortgage payments −$22,545
Cash flow −$6,259

That's −$522 a month. The gross yield is 8.2% and the net yield, after running costs but not the mortgage, 4.7%. On the $98,000 you put in (the down payment and buying costs), the cash return is −6.4%.

How the rent changes the picture, with everything else the same:

Rent a month Cash flow a month Gross yield Net yield
$2,000 −$875 6.9% 3.4%
$2,400 −$522 8.2% 4.7%
$2,800 −$168 9.6% 5.9%
$3,200 $185 11.0% 7.1%

These are first-year figures, before tax and any change in the property’s value.

What the numbers mean

  • Cash flow: rent collected, less the mortgage and every running cost. It’s what the property puts in or takes out of your pocket each month.
  • Gross yield: a year’s rent as a share of the price. Quick for comparing listings, but it ignores costs.
  • Net yield: rent after running costs, but not the mortgage, as a share of the price. Better for comparing properties, whatever the financing.
  • Cash-on-cash return: cash flow as a share of the cash you put in. It shows what your own money earns.

Costs to budget for

  • Property tax: varies a lot by state and county. See the property tax calculator for your state’s typical rate.
  • Insurance: a landlord policy, rather than a homeowner’s policy.
  • Repairs and upkeep: the calculator starts at 1% of the price a year. Older homes often need more.
  • Management: the calculator starts at 8% of the rent collected. Managing it yourself saves this, but takes your time.
  • Empty months: between tenants you pay the costs with no rent. The calculator starts at 4% of the year.
  • HOA fees: if the home is in a community with a homeowners association.

Ways to improve the numbers

  • Put more down: a smaller loan means a smaller payment, though your cash-on-cash return can fall.
  • Compare rents nearby: check what similar homes rent for before you buy.
  • Check the costs before you buy: a higher property tax or HOA fee can turn a positive cash flow negative.
  • Plan for the long term: much of a rental’s return can come from paying down the loan and the home’s value rising, which isn’t guaranteed. When you sell, the gain is taxed: see the capital gains tax calculator.

Thinking of living in the home instead? Compare in the rent vs buy calculator, and see the full monthly payment in the mortgage calculator.

Last updated

Frequently asked questions

What is a good rental yield?

It depends on the area: cheaper areas often have higher yields but slower price growth. A gross yield of 5% to 7% is common; compare the net yield, after costs, between properties.

What is the difference between gross and net yield?

Gross yield is a year’s rent as a share of the price. Net yield takes off running costs such as repairs, insurance, rates or property tax, and management, but not the mortgage.

Why is my cash flow negative?

At today’s interest rates, rent often doesn’t cover the mortgage and costs, especially with a small deposit. Investors then rely on the property’s value rising, which isn’t guaranteed.

How is rental income taxed?

Rent minus expenses, mortgage interest and depreciation is taxed as ordinary income. Depreciation often cuts the taxable profit a lot, but is taxed back when you sell.

What is cash-on-cash return?

A year’s cash flow, after the mortgage and all running costs, as a share of the cash you put in: the down payment plus the costs of buying. It’s the return on your own money, before any rise in the property’s value.