Real Estate Investment Calculator
Quick answer
NOI = effective gross rent minus operating expenses (management, taxes, insurance, repairs, utilities you pay)—before debt. Pre-tax cash flow = NOI − debt service. Cap rate uses NOI ÷ price; cash-on-cash uses cash flow ÷ cash invested; DSCR uses NOI ÷ debt service. If any of those only work with best-case rent and 3% vacancy, you are not conservative—you are wrong.
For a related estimate, see Cap Rate Calculator.
Explore further: Rental Cash Flow Calculator · Cash On Cash Return Calculator
Formulas (what is in / out)
NOI = effective gross income − operating expenses. Operating expenses include management, taxes, insurance, repairs, and turnover; they exclude mortgage principal and interest, owner income taxes, and principal paydown (equity, not expense). Cap rate = NOI ÷ purchase price (unlevered yield). Cash-on-cash = pre-tax cash after debt service ÷ total cash invested (down, closing, rehab out of pocket). DSCR = NOI ÷ annual debt service. None of these reward you for skipping reserves—model reserves or accept that NOI is overstated.
Explore further: Dscr Calculator · Airbnb Calculator
Rental underwriting answers whether rent, after honest operating costs, supports the debt and still pays your equity a return worth the risk. That is different from owner-occupant affordability (mortgage affordability). Tie every offer to a P&I at the rate and amortization you can actually get on non-owner loans.
How to use this calculator
- Build NOI from leases, not listings: Signed rent rolls beat broker pro formas. Seasonal markets need seasonal vacancy, not annualized summer rents.
- Book capex as its own line: A $10k roof every 15 years is ~$55/mo in reality—burying it in “repairs” inflates NOI.
- Compare deals at identical leverage: Same down payment and rate band—or you are mixing a value-add story with a speculation on cheap debt.
Hidden assumption: cap rate ignores financing
Two properties at the same cap can produce wildly different cash-on-cash if loan terms differ. High cap with expensive debt can lose to moderate cap with cheap, long fixed-rate paper.
Real-world examples
- Case study: $420k duplex, $3,200/mo gross: Annual gross $38,400. Vacancy 8% → $35,330 effective gross. Operating expenses $900/mo ($10,800/yr) including management and reserves → NOI ≈ $24,530. At a $320k loan at 7% for 30 years, P&I ≈ $2,130/mo (~$25,560/yr)—roughly break-even on cash before income tax; cap rate on the $420k purchase is ~5.8% unlevered. Cut rent 10% and NOI falls ~$3,800—DSCR and cash flip negative fast.
- Sensitivity check: Rerun with the return assumption 1-2 points lower and the time horizon a few years shorter. If the outcome still works, the plan has margin; if it collapses, the plan depends on optimistic assumptions holding.
Explore further: Brrrr Calculator
What to decide
Most buy-and-hold investors in stable markets want enough spread that a −10% rent shock still clears debt with reserves. If the only path to your target return is appreciation, say so explicitly—you are making a different bet than yield. House-hackers: optimize for your exit timeline, not a spreadsheet optimized for year-one rent.
FAQ
What’s a good cap rate for rentals?
There is no universal “good”—cap rate is compensation for risk. Many investors see mid–single digits in tight, low-vacancy markets and higher teens in rougher areas; compare only to closed sales in the same submarket and condition class.
What is NOI in real estate?
NOI is rent after realistic vacancy, minus operating expenses—not the mortgage. It is the property-level profit before debt service; cap rate and DSCR sit on top of NOI.
What is cash-on-cash return?
Pre-tax cash flow after debt service divided by cash you put in (down payment, closing, rehab). It answers what your equity earns per year; leverage can juice cash-on-cash while cap rate stays fixed.
Is negative cash flow always bad?
Not if you planned it—some buyers subsidize early years for appreciation or value-add. If negative flow is a surprise, you underwrote rent or expenses wrong.
How is cap rate different from cash-on-cash?
Cap rate is NOI ÷ price (unlevered). Cash-on-cash is cash after the loan ÷ your cash in—same NOI, different loan, different cash-on-cash.