Cash-on-Cash Return and Cap Rate Calculator (Rental Property)
The cash-on-cash return, cap rate, net operating income, mortgage payments and debt service coverage of a rental property, from the price, deposit, loan, rent and costs.
Results
The dashed line marks the value you entered.
What this tool does
The cap rate divides the property's net operating income by its price and ignores how you pay for it, so it compares buildings. The cash-on-cash return divides what is left after the mortgage by the cash you actually put in, so it compares your own deal — and it is where leverage shows: a smaller deposit raises it only if the cap rate is higher than the mortgage rate, otherwise it pushes the return down towards negative, and the chart shows which way your numbers go. Operating costs here exclude the mortgage and any income tax; allow for empty weeks and repairs honestly, because they are what most first-time landlords underestimate.
Formula
NOI = rent × (1 − vacancy) − operating costs · cap rate = NOI ÷ price · cash-on-cash = (NOI − mortgage payments) ÷ cash invested
Variables
| Symbol | Meaning | Unit |
|---|---|---|
pp | Property price | — |
dp | Down payment | % |
cc | Purchase costs (fees, taxes, repairs) | — |
ra | Mortgage interest rate per year | % |
yr | Mortgage term in years | a |
gr | Rent per year if fully let | — |
vc | Time empty or unpaid | % |
ox | Operating costs per year (tax, insurance, upkeep, management) | — |
CO | Cash-on-cash return | % |
CR | Capitalisation rate (NOI ÷ price) | % |
NO | Net operating income per year | — |
DS | Mortgage payments per year | — |
CF | Cash left after the mortgage, per year | — |
CI | Cash you put in | — |
DC | Debt service coverage ratio (DSCR) | — |
GM | Gross rent multiplier (price ÷ yearly rent) | — |
Worked example
- Property price250,000
- Down payment25 %
- Purchase costs (fees, taxes, repairs)6000
- Mortgage interest rate per year6.5 %
- Mortgage term in years30 a
- Rent per year if fully let24,000
- Time empty or unpaid5 %
- Operating costs per year (tax, insurance, upkeep, management)7000
- Cash-on-cash return2.30 %
- Capitalisation rate (NOI ÷ price)6.32 %
- Net operating income per year15,800
- Mortgage payments per year14,222
- Cash left after the mortgage, per year1578
- Cash you put in68,500
- Debt service coverage ratio (DSCR)1.11
- Gross rent multiplier (price ÷ yearly rent)10.4
Limitations
- This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
- Tax rates and rounding rules differ between countries and sometimes between regions. Use the rate that applies to your invoice.