Free tool

Rental property calculator

Enter an after-repair value, a purchase price, a rehab budget, and the living area. The page returns the rent estimate, the entry cost, a year of gross rent, expenses, net operating income, the cap rate, and the gross rent multiplier. The arithmetic is the long-term rental card from the deal report. It runs in the browser. Nothing you type is uploaded.

The form starts on an invented example so the rounding can be checked by hand. The dollar figures below are invented. They are not a closed sale, not a listing, and not a rent roll. The rent line is not a signed lease. The cap rate guide already walks the same worksheet in prose. This page is the calculator. It does not replace that guide.

The formula, written out

Entry cost is the purchase price plus the rehab. Buyer closing, seller closing, and the monthly holding line live on the flip projection. They are not added here. A mortgage payment is not subtracted from net operating income. The cap rate is the return on the cash it took to buy the house and repair it.

Monthly rent is an estimate. It is the average of 1 percent of after-repair value and $1.25 per square foot of living area. Each of those two pieces is rounded to the nearest dollar, then the average is rounded. Half a dollar rounds up. If square footage is zero, both pieces use 1 percent of after-repair value, so the result is that 1 percent figure. This rent estimate is not the screen that monthly rent divided by purchase price is at least 1 percent. A year of gross rent is the monthly figure times 12, with no further rounding.

Expenses are 45 percent of that annual gross rent, rounded to the nearest dollar. Net operating income is annual gross minus that rounded expense line. Round the expense dollars first and then subtract. This page does not apply the 50 percent expense share. That share, and cash-on-cash, stay on the BRRRR pages. Do not paste one percent into the other formula.

Cap rate is net operating income divided by purchase plus rehab. The percent is round(income / entry × 1000) / 10, which is one decimal place, with a trailing 5 rounding up. If purchase plus rehab is zero, the cap rate is 0 rather than a division by zero. Gross rent multiplier is the same purchase-plus-rehab total divided by a year of gross rent, then round(entry / gross × 10) / 10. The card prints that as a one-decimal multiplier, such as 5.8x. If annual gross rent is zero, the multiplier is 0. The numerator is purchase plus rehab, not the purchase price alone, so a repair budget changes the multiplier even when the rent does not. The purchase price is a dollar amount you type. In the report that purchase price is often the maximum allowable offer, and you can build that offer on the MAO calculator.

How the comparison card labels the cap rate

The comparison card labels a cap rate of 8 percent or higher as Low, 5 percent up to 8 as Medium, and under 5 as High. A cap rate of exactly 8 percent is Low. A cap rate of exactly 5 percent is Medium. The band is a label on the percent this formula just computed. It does not check a lease. A cap rate of 0, which is what a zero entry cost or a zero rent produces, is under 5, so the band is High.

An invented example that matches the cap rate worksheet

This check is invented. After-repair value is $200,000. Purchase price is $94,000. Rehab is $40,000. Living area is 1,500 square feet. Those are the defaults on the form above, and they are the same inputs the cap rate guide already prints, so the two pages do not disagree.

• Entry cost is $94,000 + $40,000 = $134,000.
• Rent from value is 1 percent of $200,000, which is $2,000.
• Rent from size is 1,500 × $1.25 = $1,875.
• Monthly rent is the rounded average of $2,000 and $1,875, which is $1,938.
• Annual gross rent is $1,938 × 12 = $23,256.
• 45 percent of $23,256 is $10,465.20, which rounds to $10,465 of expenses.
• Net operating income is $23,256 − $10,465 = $12,791.

Cap rate is $12,791 / $134,000. That quotient times 1,000 is 95.455, which rounds to 95, then divided by 10 is 9.5 percent. The card prints 9.5%. That 9.5 percent is in the Low band. Gross rent multiplier is $134,000 / $23,256. That quotient times 10 is 57.619, which rounds to 58, then divided by 10 is 5.8. The card prints 5.8x. Both figures use the $134,000. Neither one uses the $94,000 purchase by itself, and a mortgage payment is not subtracted from the $12,791.

Same rent, more cash in the denominator

This second check is also invented. Keep the $200,000 after-repair value and the 1,500 square feet, so the rent stays $1,938 and the net operating income stays $12,791. Replace the purchase and the rehab. Purchase is $120,000. Rehab is $50,000. Entry cost is $170,000. Expenses do not change, because they are a share of rent, and the rent did not change.

Cap rate is $12,791 / $170,000. That quotient times 1,000 is 75.241, which rounds to 75, then divided by 10 is 7.5 percent. The multiplier is $170,000 / $23,256. That quotient times 10 is 73.099, which rounds to 73, then divided by 10 is 7.3. The card prints 7.5% and 7.3x. 7.5 percent sits in the Medium band, because it is at least 5 and under 8. The income is the same $12,791. The cap rate fell from 9.5 percent to 7.5 percent, and the multiplier rose from 5.8 to 7.3, only because the denominator grew. A rehab number you typed low will make both figures look better than the job you actually build.

What moves when you change one field

Changing the after-repair value changes the rent that comes from 1 percent of that value. The monthly rent, the annual gross, the 45 percent expense line, and the net operating income all move with it. The entry cost does not, unless you also change the purchase or the rehab. The cap rate and the multiplier then move because the income or the rent changed while the entry cost stayed put.

Changing the square footage changes only the size piece of the rent estimate. Zero square footage drops that piece and uses 1 percent of ARV on both sides, so the rent becomes the rounded 1 percent of ARV. Zero ARV and zero square footage together make the rent, the annual gross, the expenses, the net operating income, the cap rate, and the multiplier all 0. The page does not divide by zero in that case.

Changing the purchase price or the rehab changes the entry cost and leaves the rent alone. Net operating income stays on the same dollar amount. The cap rate falls when the entry cost rises, and the multiplier rises, because purchase plus rehab is the numerator of the multiplier and the denominator of the cap rate. That is why the second example keeps $12,791 of income and still prints a different cap rate and a different multiplier.

What these lines leave out

This page does not implement the refinance card. There is no loan, no cash back, and no cash left in the deal. Cash-on-cash stays on the BRRRR refinance guide. This page does not apply the 50 percent expense share. The 45 percent line is the rental card’s expense share, and it is not an itemized budget. The rent line is not a signed lease.

A mortgage payment is not subtracted from net operating income. There is no interest rate and no monthly debt service in the formula. Closing costs from the flip projection are outside the entry cost. If you paid those dollars in cash, add them yourself before you treat the cap rate as the return on every dollar you wired. The band names a range on the percent. It does not name a target you have to clear.

Questions

Where to go next

• Build the purchase price on the MAO calculator before you drop it into the form above.
• Read the cap rate guide for the same worksheet written out without the form.
• Read the BRRRR refinance guide for cash-on-cash. That ratio is not computed on this page.

Open the sample analysis after you sign up. The sample uses invented figures, the same way the $200,000 examples on this page are invented.