Property Investment Analysis
Analyze your real estate investment with purchase price, down payment, financing, costs, and rental income. Calculate your cash-on-cash return and annual cash flow.
Property & Investment Details
Investment Summary
Enter property details to analyze your investment.
Metrics Explained
- Purchase Price: The total cost to buy the property
- Down Payment: Upfront cash required, expressed as percentage
- Financed Amount: The loan amount (Purchase Price - Down Payment)
- Interest Rate: Annual mortgage interest rate
- Closing Costs: Fees and costs to close the loan (typically 2-5% of purchase price)
- Renovation Costs: Initial improvements and repairs
- Total Cash Invested: Down Payment + Closing Costs + Renovation Costs
- Monthly Payment: Calculated mortgage payment (principal + interest)
- Monthly Rental Income: Expected monthly rent collected
- Annual Cash Flow: Annual rental income minus annual mortgage payments
- Cash-on-Cash Return: (Annual Cash Flow / Total Cash Invested) × 100 - shows annual return on your cash investment
Evaluating a Rental Property Deal
Cash-on-cash return is the primary metric for evaluating a leveraged rental property: annual pre-tax cash flow divided by total cash invested. A property with $3,000/year positive cash flow on $80,000 invested (down payment + closing costs + renovations) has a 3.75% cash-on-cash return. Most experienced investors target 5–10% cash-on-cash; below 4% is generally considered thin, and anything negative means the property costs money to hold each month.
Note that this calculator shows cash flow before property management fees, vacancy, maintenance, and other operating expenses. To get a realistic net cash flow, subtract 30–40% of gross rent for these costs: roughly 10% for management, 5–10% for vacancy, 5–10% for maintenance, plus property taxes and insurance. A property that looks cash-flow positive on paper often runs at breakeven or small loss after all realistic expenses are factored in.
The 1% Rule as a Screening Tool
The 1% rule is a quick screening heuristic: monthly rent should be at least 1% of the purchase price for a property to potentially cash-flow well. A $200,000 property should rent for at least $2,000/month. The rule emerged when mortgage rates were lower and helps identify properties worth deeper analysis. In expensive coastal markets today, very few properties pass the 1% rule — investors in those markets are primarily betting on appreciation, not income. In lower-cost Midwest markets, the 1% rule is achievable and sometimes exceeded. Use it as a first-pass filter, not a final decision — always run full expense projections.
Frequently Asked Questions
What is a good cash-on-cash return for rental property?
In the current rate environment (2024–2025), a cash-on-cash return of 5–8% is considered solid for most US markets. Highly competitive markets may see 2–4% cash-on-cash for properties investors accept for their appreciation potential. Some investors in investor-friendly markets target 10%+ cash-on-cash. The right benchmark depends on alternatives: if risk-free savings accounts yield 4–5%, a rental property at 5% cash-on-cash offers minimal risk premium. A 8–10% cash-on-cash return offers meaningful compensation for the illiquidity, management burden, and risk of rental property ownership.
Should I include renovation costs in total cash invested?
Yes — include all cash spent before the property is rent-ready in your total cash invested figure. This gives you an accurate picture of your actual return on the capital deployed. A property that requires $20,000 in renovations before renting is effectively a $20,000 more expensive purchase than its sale price suggests. Excluding renovation costs inflates your apparent return. If you finance renovations (through a rehab loan, HELOC, or construction loan), include only the out-of-pocket portion in cash invested — financed amounts are accounted for in your monthly payment, not as upfront cash.
How does leverage affect my return on investment?
Leverage amplifies both gains and losses. If you buy a $300,000 property with $60,000 down and it appreciates 5% to $315,000, your equity grows from $60,000 to $75,000 — a 25% return on your cash invested, though the property only appreciated 5%. This is positive leverage. However, if property values fall 10% to $270,000, your equity falls from $60,000 to $30,000 — a 50% loss on your cash invested. Leverage makes real estate returns both potentially large and potentially volatile. The mortgage payment also creates ongoing cash flow risk — if a tenant leaves and the property sits vacant, you still owe the mortgage.