Rental Property Calculator

A rental property's return comes from several sources at once: rental cash flow, mortgage paydown, tax benefits from depreciation, and appreciation realized at sale, and a single number like 'cap rate' can't capture all of them. A full pro-forma ties them together so you can judge the investment the way a serious buyer would.

This calculator builds that year-by-year pro-forma: income net of vacancy and expenses, mortgage interest and principal, depreciation and taxes, before- and after-tax cash flow, and the net proceeds of a hypothetical sale, rolled up into cash-on-cash return, NPV, and IRR.

How does this calculator work?

Enter the purchase price and financing (up to two mortgages), the rent and vacancy, operating expenses, depreciation, your tax rate, and a hypothetical sale year. The calculator builds a full year-by-year rental property pro-forma.

Gross rent grows every year at the rent inflation rate you enter, and operating expenses (property taxes, insurance, utilities, repairs, HOA, and other costs) inflate separately at their own rate, so the two don't have to move in lockstep.

Interest on each of your mortgages is pulled from a full monthly amortization schedule, then summed into an annual figure. Depreciation is the depreciable basis (purchase price minus land value) divided evenly across your depreciation schedule, 27.5 years for residential or 39 for commercial, with the final, fractional year getting a prorated partial deduction before depreciation stops entirely.

Taxable income is net operating income minus interest and depreciation, taxed at your marginal rate. Unlike our Farmland calculator, a loss year here does not create a tax benefit: the tax floors at zero rather than going negative.

The calculator also tracks your loan balance and the property's appreciating value each year, giving you a loan-to-value ratio. At every single year, it separately models what selling that year would look like: the appreciated sale price, minus your remaining loan balance, minus selling costs, minus capital gains tax on the appreciation, minus depreciation recapture tax on the depreciation you've already claimed.

That sale proceeds figure is combined with every prior year's cash flow into an IRR on your original invested equity, which is why you can pick any hypothetical sell year and see its return immediately, and why the before- and after-tax IRR curves climb as more years of income and appreciation build up.

Headline results include year-1 cash-on-cash return and equity build-up, NPV of the cash flows, tax savings from depreciation, and before- and after-tax IRR through your chosen sell year.

Worked example

A $300,000 rental with $75,000 down, renting for $2,400/month, with typical expenses and a sale modeled in year 10.

Purchase price / down

$300,000 / $75,000

Gross rent

$2,400/mo

Year-1 cash-on-cash

6–9%

Plus equity build-up (yr 1)

from principal paydown

After-tax IRR (10-yr hold)

the headline return

How the numbers work

Start with gross rent: $2,400 × 12 = $28,800 a year. Subtract a vacancy allowance and operating expenses (taxes, insurance, maintenance, management) to get net operating income, then subtract the mortgage payment to reach annual cash flow.

Year-one cash-on-cash is that first-year cash flow divided by the $75,000 you actually invested, typically landing in the 6–9% range once realistic expenses are applied.

The IRR goes further: it discounts every year's cash flow plus the net proceeds of the year-10 sale (after paying off the loan, depreciation recapture, and capital gains) back to your $75,000 outlay, giving the annualized return across the whole hold.

Year-1 cash-on-cash measures only the first year's cash flow against your down payment. The IRR is the fuller picture: it folds in every year's cash flow plus the gain at sale, which is often where most of a rental's return actually comes from.

Small changes in rent, vacancy, or sale price swing the IRR significantly, so it's worth testing a range rather than trusting one optimistic set of assumptions.