Rental property calculator

How to evaluate a rental property investment

A rental property calculator is only as good as the numbers you feed it. The most important input is rent. Overestimate by $200 a month and a bad deal looks good. Start with accurate rental comps, then layer in realistic expenses. This calculator includes CapEx reserves alongside maintenance because they serve different purposes: maintenance covers day-to-day repairs, while CapEx reserves save for large capital items like a new roof, HVAC, or water heater.

Understanding DSCR

Debt Service Coverage Ratio (DSCR) is the metric lenders use to determine if a property generates enough income to cover its mortgage payments. It's calculated as NOI divided by annual debt service. A DSCR of 1.0 means the property exactly covers the mortgage. Most lenders require 1.25x or higher for DSCR loans, which are increasingly popular with investors because they qualify based on the property's income rather than your personal income.

What is a good cash flow?

Most experienced investors target at least $100 to $200 per unit in positive monthly cash flow after all expenses. Cap rate gives you a snapshot without financing, while cash-on-cash return shows how hard your invested dollars work. For a quick screening before running a full analysis, try our 1% rule calculator. To see just the mortgage payment, use the mortgage calculator with extra payment modeling.

Common mistakes when analyzing rentals

The most common mistake is underestimating expenses. New investors forget about vacancy, underbudget maintenance, and ignore CapEx entirely. A property that looks great on paper can bleed money when the roof needs replacing in year three. Budget at least 5% of rent for maintenance and another 5% for CapEx reserves. If you're not self-managing, add 8-12% for a property manager. And always use actual market rent from comparable properties, not the asking rent on a listing.