Free US Investor Tool

Rental Property ROI Calculator

Estimate NOI, cap rate, pre-tax cash-on-cash return, first-year mortgage interest, depreciation, and a simplified Schedule E result. Model financing in the mortgage calculator first.

Cap Rate Cash-on-Cash ROI MACRS Depreciation Schedule E Tax 1% Rule Check Monthly Cashflow

Property Details

Purchase & Financing
$
%
$
%
yr
%
Rental Income
$
%
Annual Operating Expenses
%
%
%
$
$
Tax Rates
%
%
↓ Methodology ↓
How this calculator works — formulas & sources
Gross Rental Yield
Gross Yield = Annual Rent ÷ Purchase Price × 100%
Quick screening metric before expenses. Does not account for financing, vacancy, or operating costs. Compare net yield for actual investment decisions. Cap Rate explained
Net Operating Income (NOI)
NOI = Gross Rent × (1 − Vacancy%) − Annual Operating Expenses
Operating Expenses = Management + Maintenance + Tax + Insurance + HOA
Excludes mortgage payments and income taxes. The core metric for property valuation independent of financing structure. FHA vs Conventional
Cap Rate
Cap Rate = NOI ÷ Purchase Price × 100%
Cap rate compares unlevered NOI with price. It has no universal good threshold: property type, location, condition, lease risk, growth assumptions, and prevailing yields all matter. Cap Rate explained
Cash-on-Cash ROI
CoC ROI = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100%
Cash Flow = NOI − Annual Mortgage Payments
Cash Invested = Down Payment + Closing Costs
This calculator uses the standard pre-tax version: NOI minus annual mortgage payments, divided by down payment plus closing costs. Compare the result with your own required return rather than a universal target. Mortgage vs Rent
MACRS Depreciation
Full-Year Amount = Depreciable Basis ÷ 27.5
First-Year Amount = Full-Year Amount × Mid-Month Fraction
Residential rental buildings generally use 27.5-year GDS and the mid-month convention. The selected placed-in-service month determines this calculator's first-year fraction; land is excluded. MACRS Depreciation
Schedule E Tax Estimate
Taxable Income = NOI − Mortgage Interest − Depreciation
Tax Owed = Taxable Income × (Federal Rate + State Rate)
After-Tax Cash Flow = Pre-Tax Cash Flow − Tax Owed
The model sums interest from the first 12 amortization payments and applies the entered federal-plus-state rate only to positive simplified taxable income. It does not monetize a loss or model passive-loss, at-risk, basis, NIIT, state, or taxpayer-specific limitations. Mortgage vs Rent
1% Rule
Monthly Rent ÷ Purchase Price ≥ 1%
The 1% rule is only a historical screening heuristic. Passing it does not establish positive cash flow, and failing it does not establish a poor investment. Use the complete expense and financing model, including closing costs. FHA vs Conventional
Official sourcesIRS Publication 527: residential rental property · IRS Schedule E · IRS Publication 925: passive activities

Investment Analysis

Cash-on-Cash ROI
—
—
⬤ Calculating…
Cap Rate
—
all-cash return
Gross Rent Mult.
—
price ÷ ann. rent
Monthly Cashflow
—
after tax
NOI (annual)
—
before financing
—
Annual Income & Expenses
Schedule E Tax Summary
Annual Mortgage Interest—
MACRS Depreciation (27.5yr)—
Schedule E Taxable Income—
Est. Tax Liability—

Download the Full Excel Version

Includes Schedule E summary worksheet and complete US Rental Investment Guide.

Download — $14.99
How it works

The metrics that serious investors use

Monthly cash flow is only one result. Compare financing, operating costs, tax assumptions, and the initial cash shown by the closing-cost estimator.

CAP RATE
The all-cash return

Cap rate is NOI divided by purchase price. It removes financing so properties can be compared on operations, but it does not include capital expenditure, appreciation, sale costs, or income tax. A higher cap rate may signal more income, more risk, or both—there is no universal good range. Cap Rate explained

CASH-ON-CASH ROI
Return on your actual cash

Cash-on-cash return here means annual pre-tax cash flow divided by down payment plus closing costs. It reflects leverage but not appreciation, principal paydown, sale proceeds, or a complete tax return. Evaluate it against your own risk-adjusted required return. Mortgage vs Rent

MACRS DEPRECIATION
The US investor's tax shield

A residential rental building is generally depreciated over 27.5 years under GDS; land is not depreciable. The first and final years use the mid-month convention, so simply dividing basis by 27.5 overstates most first-year deductions. Depreciation is also subject to basis and use rules. MACRS Depreciation

SCHEDULE E
How rental income is taxed

Schedule E generally reports rental income and allowable expenses, including qualifying interest and depreciation. Deductibility can be limited by personal-use, passive-activity, at-risk, basis, and other rules. This calculator estimates positive taxable income but deliberately assigns no immediate tax benefit to a modeled loss. Mortgage vs Rent

THE 1% RULE
The quick cashflow screen

The 1% rule compares monthly rent with the purchase price. It ignores vacancy, operating expenses, financing, condition, and risk, so passing or failing it does not determine the investment result. Use it only as a quick ratio before the complete analysis. Cap Rate explained

PASSIVE ACTIVITY RULES
The tax limit most investors hit

Rental activity is generally passive. A special allowance of up to $25,000 may apply to qualifying active participants, subject to modified-AGI phaseout and other limits. Real-estate-professional status alone does not automatically make every rental nonpassive; material participation must also be evaluated. Mortgage vs Rent

FAQ

Common questions

What is a good cap rate for a rental property in the US?
There is no universal good cap rate. Compare the property with recent transactions for the same property type and location, then adjust for condition, lease quality, capital expenditure, growth assumptions, and risk. Cap rate is an unlevered operating metric—not a complete return forecast. Cap Rate explained
How does MACRS depreciation work for rental properties?
Residential rental buildings generally use 27.5-year GDS; land is excluded. The mid-month convention means first-year depreciation depends on the placed-in-service month. Basis may also include or exclude particular acquisition costs and improvement costs. Sale taxation is more nuanced than a flat 25% recapture statement. MACRS Depreciation
Can I deduct mortgage interest on a rental property?
Interest on debt properly allocable to a rental activity is generally reported as a rental expense, subject to applicable allocation and limitation rules. Principal repayment is not deductible. This calculator sums the interest portion of the first 12 modeled payments rather than multiplying the opening balance by the rate. Mortgage vs Rent
What is the passive activity loss rule and how does it affect me?
Rental activities are generally passive. A qualifying active participant may receive a special allowance of up to $25,000, subject to modified-AGI phaseout and other limitations. A taxpayer meeting the real-estate-professional tests must still establish material participation for the relevant rental activity or grouping. MACRS Depreciation
What down payment do I need for an investment property?
Required equity depends on occupancy, units, loan product, borrower profile, and lender. FHA and VA programs generally require owner occupancy and are not ordinary financing for a purely non-owner-occupied purchase. Enter the actual offered terms in the mortgage calculator rather than relying on a market-average spread. FHA vs Conventional
Is rental income taxed as ordinary income?
Net taxable rental income is generally included in ordinary income, but the final liability can involve passive-loss rules, NIIT, state tax, basis, at-risk limits, and other return-specific items. On sale, adjusted basis, depreciation, holding period, and gain character matter; unrecaptured Section 1250 gain has a maximum 25% federal rate rather than an automatic flat 25% tax on every depreciation dollar. MACRS Depreciation