How to Use a Real Estate Investment Calculator

A rental property calculator needs about a dozen inputs: price, rent, vacancy, property tax, insurance, management, repairs, a reserve for big replacements, and your loan terms. It returns net operating income (NOI), cap rate, monthly cash flow, cash-on-cash return, and debt-service coverage ratio (DSCR). A deal fails when cash flow is negative or DSCR is below 1.0, meaning the rent left after operating costs does not cover the mortgage. In the example below, a $280,000 house renting for $2,400 a month loses about $215 a month; it breaks even at a price near $246,000 or rent near $2,700. For where deal analysis fits in building rental income, see what passive income is.

What to enter and where to get each number

Use a number from a document or a quote wherever one exists.

Expect a rate quote above the weekly averages. Freddie Mac's survey put the average 30-year fixed rate at 7.32% on October 22, 2026, and Fannie Mae adds a pricing charge, called a loan-level price adjustment, to every mortgage on an investment property.

One cross-check for your vacancy and repair figures: when FHA tests whether a 3-4 unit home's rent can carry its mortgage, it subtracts at least 25% of market rent for vacancy and maintenance combined. The example below uses 20% for vacancy, repairs, and the capital reserve together, so its results lean optimistic, and the deal still fails.

What each output means

• NOI: rent collected (after vacancy) minus operating expenses. It leaves out mortgage payments, depreciation, and income taxes.
• Cap rate: NOI divided by price. It lets you compare properties without regard to the loan. Cap rate explained covers what counts as a good one.
• Annual cash flow: NOI minus the year's loan payments of principal and interest (plus any mortgage insurance). Leave out the taxes and insurance a lender collects in escrow, because NOI already counts them. Divide by 12 for monthly cash flow.
• Cash-on-cash return: annual cash flow divided by the cash you put in (down payment, closing costs, and upfront repairs). Cash-on-cash return explained shows how the loan changes it.
• DSCR: NOI divided by annual loan payments (principal and interest). At 1.0 the property just covers its loan; below 1.0 you pay the gap from your own pocket. A lender's DSCR can use a different formula, such as monthly rent divided by the full payment including taxes and insurance, which gives about 1.24 for the house below ($2,400 / $1,934). Ask each lender for its formula and minimum before comparing.

Worked example: a deal that fails

A single-family house is listed at $280,000 and comparable homes rent for $2,400 a month. The buyer puts 25% down and borrows $210,000 at an assumed 7.75% for 30 years. The tax, insurance, repair, and reserve figures below are assumptions for the example; replace them with your own.

Income

• Gross rent: $2,400 x 12 = $28,800
• Vacancy at 7%: $2,016
• Rent collected: $26,784

Operating expenses

• Property tax at 1.2% of price: $3,360
• Insurance quote: $1,800
• Management at 9% of rent collected: $2,411
• Repairs at 8% of gross rent: $2,304
• Capital reserve at 5% of gross rent: $1,440
• Total: $11,315

Results

• NOI: $26,784 - $11,315 = $15,469
• Cap rate: $15,469 / $280,000 = 5.5%
• Mortgage payments: $1,504 a month, or $18,054 a year
• Annual cash flow: $15,469 - $18,054 = -$2,585, about -$215 a month
• DSCR: $15,469 / $18,054 = 0.86
• Cash in: $70,000 down + $8,400 closing costs (3%) = $78,400
• Cash-on-cash return: -$2,585 / $78,400 = -3.3%

The deal fails on both tests: cash flow is negative and DSCR is below 1.0.

What price or rent would fix it

Rerun the calculator with one input changed at a time. In these rows, property tax moves with the price; management, repairs, and the reserve move with the rent; insurance stays at $1,800.

At $246,000 the house covers its costs with nothing left over, so one large repair or a longer vacancy turns it back into a loss. A price near $211,000 gives a DSCR of 1.20 and about $224 a month of cash flow, which is closer to a deal that holds up. Putting 40% down also turns the cash flow positive, but it ties up $120,400 for $1,026 a year, a 0.9% cash-on-cash return. If the seller will not come down toward a price that works, the numbers say to pass on this house.

Before you make an offer, run the same deal at a rate one point higher and with a longer vacancy. The Office of the Comptroller of the Currency (OCC), which supervises national banks, tells lenders to look at rents, vacancy, and expenses under both normal and stressed conditions, and to stress-test interest rates and DSCR. Risk assessment for beginning investors covers the other risks a calculator does not show.