Rental Property Calculator

Real estate investing is one of important vehicle to accumulate the wealth in the long run. People usually purchase investment properties with the intent of making money through rental income. This calculator helps the real estate investors to analyze the investment costs, expenses and earnings and calculate the potential return on investment (ROI).

Income

The income includes rental property and other related income minus vacancy rate, management fee

Expense

The expense includes property tax, property insurance, home association fee (HOA), maintenance, utilities and other cost that may associated with

Net Operating Income

Net Operating Income = Income - Expenses

In monthly and annual basis or in the holding period.

Net Cash Flow

Net Cash Flow = Net Operating Income - Mortgage Payment - Capital Expenditure Reserve

In monthly and annual basis or in the holding period.

Cash on Cash Return or Return on Investment (ROI)

ROI = Net Cash Flow / Property Price

Return on investment measures how much money, or profit, is made on an investment as a percentage of the cost of that investment. It shows how effectively and efficiently investment dollars are being used to generate profits.

Capitalization Rate (Cap Rate)

Cap Rate = Annual Net Operating Income / Property Price

Calculated by dividing a property’s net operating income by its property value, the cap rate is an assessment of the yield of a property over one year.

Internal Rate of Return (IRR)

The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of a property investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.

Debt-Service Coverage Ratio (DSCR)

DSCR = Annual Net Operating Income / Total Loan Amount

The debt-service coverage ratio (DSCR) is a measurement of a property's available cash flow to pay current mortgage obligations. The DSCR shows investors whether a property has enough rental income to pay its loan.

Principal, interest, taxes, insurance (PITI)

PITI = Monthly Mortgage Payment + Monthly Property Tax + Monthly Property Insurance

Principal, interest, taxes, insurance (PITI) are the sum components of a mortgage payment. Specifically, they consist of the principal amount, loan interest, property tax, and the homeowners insurance and private mortgage insurance premiums. PITI is typically quoted on a monthly basis and is compared to a borrower's monthly gross income for computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer the PITI to be equal to or less than 28% of a borrower's gross monthly income.