Estimate rental property investment metrics

Evaluating a Rental Property Investment

Rental property returns are measured using several metrics: cap rate (return on total value), cash-on-cash return (return on down payment), and gross yield (rent as a percentage of price). Each metric provides a different lens on the investment's performance.

Key Metrics Explained

Cap rate = Net Operating Income / Property Value. Cash-on-cash return = annual net cash flow / cash invested. Gross yield = annual rent / property price. This calculator computes all three from your inputs.

What's Not Included

This calculator does not model mortgage amortization, appreciation, tax treatment, or vacancy rates. These factors can significantly affect actual returns. Results are simplified estimates for initial comparison purposes only.

Comparing Properties Side by Side

One approach many people find useful is running the numbers on several properties at once. Two properties with similar asking prices can look very different once operating expenses are factored. It can help to treat this calculator as a quick filter — a way to narrow down which options are worth investigating further. A higher gross yield is not always the full story. Sometimes a property with modest yield but lower expenses produces a stronger cash-on-cash return. This is worth considering before drawing conclusions from any single figure.

Common Oversights Worth Knowing About

Operating expenses are easy to underestimate. Maintenance, insurance, letting agent fees, and periods without a tenant all add up. Many people focus on the rent figure and overlook how much of it actually reaches their pocket each month. It can also help to revisit these figures annually, as costs tend to rise over time. Treating the results here as a starting point for deeper research, rather than a final verdict, is generally a sensible habit to build.