Rental property calculator
Cash flow, cap rate, cash-on-cash return and total return on a buy-to-let or investment property.
About the rental property calculator
Cash flow, cap rate, cash-on-cash return and total return on a buy-to-let or investment property.
Part of SmartCalcy’s mortgage & real estate tools. It runs in your browser with no account, uses your own currency and units (change them at the top of the page), and gives estimates for information only, so check official guidance before you rely on a result.
How to use the rental property calculator
What it calculates and when to use it
Evaluate a buy-to-let or investment property by cash flow, cap rate, cash-on-cash return, debt coverage and the total return if you sell after a holding period.
How to use it, step by step
- Enter the price, deposit percentage and mortgage terms.
- Enter monthly rent, expected empty periods and running costs.
- Add rent and price growth assumptions, how long you will hold it and the cost of selling.
- Check cash flow first, then cap rate, cash-on-cash and IRR.
What each input means
- Rent per month – Gross rent before costs.
- Empty periods – Share of rent lost to gaps between tenants.
- Tax and charges, insurance – Yearly property costs.
- Management and repairs – Percentage of rent set aside for agents, maintenance and repairs.
- Growth rates – Yearly rent and price increases.
How to read the results
- Cash flow – Net operating income minus mortgage payments.
- Cap rate – Net operating income ÷ price.
- Cash-on-cash return – First-year cash flow ÷ cash invested.
- Debt coverage ratio – Net operating income ÷ yearly mortgage payments. Lenders often want 1.25 or more.
- IRR – The yearly return counting cash flows and the final sale.
The formula
NOI = rent × 12 × (1 − empty share) − tax − insurance − management. Cap rate = NOI ÷ price. Cash flow = NOI − mortgage payments. Cash-on-cash = cash flow ÷ (deposit + buying costs). IRR is the rate that makes the present value of all yearly cash flows, including the sale, equal to zero.
A worked example
A 250,000 property with 25% down at 6.5%, rented at 1,500 a month. NOI is 11,800, giving a cap rate of 4.72%. The mortgage is 1,266.01 a month, so cash flow is about −283 a month, debt coverage is 0.78 and the first-year cash-on-cash return is −4.85%. Growth and the sale lift the 10-year IRR to about 7.6%.
Assumptions and limits
- Fixed costs rise 2% a year in the projection.
- Tax on rental income and gains is excluded and can change the result a lot.
- The loan is repaid and the property sold at the end of the holding period.
Common mistakes
- Ignoring empty periods and repairs.
- Judging a deal by the cap rate alone without checking the mortgage.
- Assuming rent and price growth continue forever.
Frequently asked questions
What is a good cap rate?
It varies by market and risk. Compare it with the mortgage rate: if the cap rate is below it, borrowing reduces your cash yield.
Why is the IRR positive when cash flow is negative?
Growth in the property’s value and the loan being repaid by the sale add to the return.
Related tools
Details
- Net operating income
- £11,800.00rent after empty periods and costs
- Cap rate
- 4.72%income ÷ price
- Cash invested
- £70,000.00
- Cash-on-cash return
- -4.85%first-year cash flow ÷ cash invested
- Mortgage payment
- £1,266.01per month
- Debt coverage ratio
- 0.78income ÷ mortgage; lenders like 1.25 or more
- Profit after 10 years
- £87,851.02cash flow plus sale proceeds, minus cash invested
- Yearly return (IRR)
- 7.6%