Calculate your rental property's cash-on-cash return, cap rate, and projected 5-year profit. See if that investment property is worth it.
| Year | Rental Income | Expenses | Mortgage Paid | Cash Flow | Equity Built | Cumulative Return |
|---|
Cash-on-Cash Return = Annual Cash Flow / Total Cash Invested. This tells you the yield on the actual cash you put in (down payment + closing costs). A good target is 8-12%.
Cap Rate = Net Operating Income / Purchase Price. This measures the property's income potential regardless of financing. Higher cap rates mean more income relative to price — but often in higher-risk areas. Most investors target 5-10%.
Always budget for vacancy (5-8%), maintenance (1% of property value/year), property management, and capital expenditures. The "1% Rule" — monthly rent should be at least 1% of purchase price — is a quick screening tool, but run the full numbers before buying.