Real Estate Calculator – Estimate Property Investment Returns
Analyze an investment property: cash flow, cap rate and cash-on-cash return.
About the Real Estate Calculator
What is the Real Estate Calculator?
A real estate calculator analyzes a rental property by estimating monthly cash flow, the capitalization (cap) rate and the cash-on-cash return.
Why use this calculator?
Real estate investors need to know whether rent covers the mortgage and expenses, and whether the return justifies the down payment compared with other investments.
How to use it
- Enter the purchase price and down payment.
- Enter the mortgage rate.
- Enter expected monthly rent and operating expenses.
- Review cash flow, cap rate and cash-on-cash return.
Formula
Cap rate = net operating income ÷ price; cash-on-cash = annual cash flow ÷ down payment.
Does not include vacancy, property management, closing costs or taxes. Cap rate ignores financing; cash-on-cash includes it.
Frequently Asked Questions
What is a good cap rate?
It varies by market and risk. Lower-risk areas might see 4% to 6%, while higher-risk markets often target 8% or more.
What is cash-on-cash return?
The annual pre-tax cash flow divided by the cash you invested. It measures the actual return on your out-of-pocket money.
What is compound interest?
Compound interest is interest earned on both your original money and on previously earned interest. Over time it can make savings grow much faster than simple interest.
What is the difference between nominal and effective return?
The nominal return ignores compounding within the year, while the effective (annualised) return accounts for it. The effective figure is usually higher and better reflects real growth.
How does inflation affect my returns?
Inflation erodes purchasing power. The real return is the nominal return minus inflation, so an investment can grow in dollars yet still lose value in what it can buy.
What rate of return should I assume?
A common long-term assumption for a diversified stock portfolio is about 6% to 8% per year after inflation, but returns vary and are never guaranteed.
Does this account for taxes and fees?
Unless stated, the tool shows pre-tax, pre-fee growth. Subtract your fund expense ratio and expected tax rate to estimate what you keep.
What is included in a monthly mortgage payment?
Most payments combine principal, interest, property taxes and homeowners insurance (often called PITI). Some loans also include private mortgage insurance (PMI).
What is PMI and when can I drop it?
Private mortgage insurance is usually required when your down payment is under 20%. You can typically request removal once you reach 20% equity.
Fixed versus adjustable rate — which is better?
A fixed rate keeps the same interest rate for the whole term, giving predictable payments. An adjustable rate starts lower but can rise after the initial period.