Rental Property Yield & Cash Flow Calculator
Calculate the gross and net rental yield on an investment property — plus cap rate, cash-on-cash return, monthly cash flow after the mortgage, and debt service coverage.
By Suhaib Hassan · Updated · How we verify formulas
NOI / Purchase Price
- Gross Potential Rent—
- (−) Vacancy Loss (5%)—
- (=) Effective Gross Income—
- (−) Total Operating Expenses—
- (=) Net Operating Income (NOI)—
- (−) Annual Debt Service (P&I)—
- (=) Net Pre-Tax Cash Flow—
Risk & Debt Underwriting Metrics
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10-Year Cumulative Wealth & Equity Forecast
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| Year | Property Value | Gross Rent / Yr | Loan Principal Balance | Total Accumulated Equity | Cumulative Free Cash | Total Estimated ROI |
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Methodology & Underwriting Definitions
The formulas behind each real estate metric on this page.
Net Cap Rate (Capitalization Rate)
Cap Rate = NOI ÷ Purchase PriceMeasures unleveraged yield, as if the property were bought entirely in cash. Leaving out financing makes properties and markets directly comparable.
Cash-on-Cash Return (CoC)
CoC = Annual Pre-Tax Cash Flow ÷ Total Cash InvestedCompares the cash you actually keep each year with the cash you put in: down payment, closing costs and make-ready or renovation spending.
The 50% Rule Benchmark
Opex ≈ 50% × Gross RentA rough screening rule of thumb: operating costs (excluding the mortgage) often run 40–50% of rent once vacancy, repairs and capital replacements are counted.
Gross yield vs. net yield
Gross yield is annual rent divided by property price. It is a quick way to screen properties, but it ignores all ongoing costs. Net yield subtracts annual expenses before dividing by price. Those expenses include management, maintenance, insurance, property tax and a vacancy allowance. That gives a more realistic picture of your return. On this page, net yield is the cap rate.
Two properties with the same gross yield can have very different net yields. An older property may need more maintenance. A newer one might carry higher property tax. Each erodes the gross number in a different way.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
How to use this rental yield calculator
- Enter the price and financing. Enter the purchase price, your down payment, the loan interest rate and term, and the closing costs and make-ready budget.
- Enter the rent and vacancy. Enter the gross monthly rent and the vacancy buffer, which is the share of the year the property sits empty.
- Enter operating expenses. Enter the management fee, annual property tax, landlord insurance, maintenance and CapEx reserve, and any monthly HOA dues.
- Set growth assumptions. Enter the annual appreciation and the annual rent and cost growth to see the 10-year wealth forecast.
- Read the yield and cash flow. Read the cap rate, gross yield, cash-on-cash return, monthly cash flow and DSCR.
Worked example with the calculator defaults
A $350,000 property rents for $2,600 a month. You put $87,500 down (25%) plus $12,500 of closing and make-ready costs, so your total cash in is $100,000. The loan is 30 years at 6.75%.
- Gross yield: $31,200 of annual rent ÷ $350,000 = 8.91%.
- Vacancy at 5% takes $1,560, leaving $29,640 of effective income.
- Operating expenses total $11,291: management $2,371, property tax $3,800, insurance $1,400, maintenance $3,120 and HOA $600.
- Net operating income (NOI): $29,640 − $11,291 = $18,349. Cap rate (net yield): $18,349 ÷ $350,000 = 5.24%.
- Mortgage payments (P&I) are $20,431 a year, so cash flow is −$2,082 a year (−$174 a month).
Cash-on-cash return is −$2,082 ÷ $100,000 = −2.08%, and DSCR is 0.90x. The property looks strong on gross yield but does not cover its mortgage.
What counts as an expense in this calculation
A thorough net yield calculation includes these costs:
- Property management fees, if you use a manager.
- Routine maintenance and repairs.
- Property insurance and property tax.
- HOA fees, if they apply.
- An allowance for vacancy between tenants.
Leaving any of these out will overstate your actual return.
Mortgage payments are not an operating expense, so they don't affect cap rate or net yield. They are subtracted afterwards to get cash flow, cash-on-cash return and DSCR — the numbers that show how the property performs with your financing.
Key takeaways
- Gross yield is rent divided by price. Net yield, the cap rate, subtracts vacancy and operating costs first. Your rental ROI depends on both.
- Mortgage payments do not change the cap rate. They do change cash flow, cash-on-cash return and DSCR.
- On the defaults, an 8.91% gross yield becomes a 5.24% cap rate and negative cash flow of $174 a month.
- This is an estimate. Rents, costs, vacancy and rates vary by market, so use your own figures.
Frequently asked questions
What's considered a good rental yield?
This varies significantly by market and property type, but gross yields in the 5-8% range are commonly cited as solid in many markets, while some higher-risk or lower-cost markets can show higher yields — always compare within your specific local market rather than against a universal benchmark.
Should I use gross or net yield to compare properties?
Net yield gives a more accurate picture since it accounts for actual holding costs, though gross yield is useful as a quick first-pass screening tool before digging into expense details.
What is the difference between cap rate and cash-on-cash return?
Cap rate is net operating income divided by the purchase price, so it ignores financing. Cash-on-cash return is pre-tax cash flow after the mortgage divided by the total cash you put in. It shows how your financing affects your return.
What is DSCR on a rental property?
Debt service coverage ratio is net operating income divided by your annual mortgage payments. Lenders typically look for 1.20-1.25x or more. On the calculator defaults it is 0.90x, which means the income does not cover the mortgage.
Can a rental property have a high yield and negative cash flow?
Yes. On the defaults the gross yield is 8.91%, but cash flow is −$174 a month. Operating costs and the mortgage payment come out of the rent, so a high gross yield does not guarantee positive cash flow.
What is the 1% rule?
It is a quick screen: monthly rent should be at least 1% of the purchase price. On the defaults the rent is 0.74% of the price, so the property falls below it. Many areas fall below 1%, so treat it as a first filter only.
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