How the numbers fit together
Income is rent plus anything else the property earns, less an allowance for months it sits empty. Operating costs are taxes, insurance, repairs, management and similar expenses. Income minus operating costs is net operating income. Subtract the mortgage payment from that and you have cash flow.
Cap rate and cash-on-cash
Cap rate is a year of net operating income divided by the purchase price. It lets you compare properties without the effect of financing. Cash-on-cash return is a year of cash flow divided by the cash you actually put in, so it reflects the loan. Both are optional here. Fill in the purchase price and the cash invested to see them.
Be honest with the inputs
- Vacancy. Even a well-run unit is empty some of the time between tenants. Leaving this at zero flatters the result.
- Repairs. Older buildings cost more to keep up. A percent of rent is a rough guide, so use your own history if you have it.
- Big items. Roofs, furnaces and similar large replacements do not show up every month, but they do come due. See the repair or replace calculator.
- Taxes. This does not account for income tax, depreciation or deductions. Talk to a tax professional.
Track the real numbers
Once you own the property, Dr. Landlord records the actual rent collected and the expenses you log, so you can compare reality with this estimate on the Financial Reports page. See the pricing or start free.
An estimate for planning only, not financial, tax or legal advice. Real results depend on your actual costs and market.