Rental Yield Calculator - Cap Rate, NOI, and Cash-on-Cash Return

Calculate rental yield, cap rate, NOI, annual cash flow, DSCR, and cash-on-cash return for a long-term rental property.

Last updated: 2026-03-20

Rental yield calculator

Underwrite a stabilized long-term rental with gross yield, NOI, cap rate, debt service, annual cash flow, cash-on-cash return, DSCR, and break-even occupancy.

Assumptions

Use realistic vacancy and reserve assumptions. Optimistic underwriting is the fastest way to fake a good cap rate.

Rent and occupancy

Set the property price, market rent, and how often the unit is realistically occupied.

Purchase priceAcquisition price before closing costs or rehab.

Monthly rentBase rent for a stabilized long-term lease.

Other monthly incomeLaundry, parking, pet rent, or storage income.

Occupancy rateCollected income after vacancy and collection loss.

Operating expenses

NOI should include property-level expenses, but not financing, taxes, or depreciation.

Annual property taxUse the current tax bill or a realistic post-purchase estimate.

Annual insuranceLandlord policy and any umbrella premium allocated to this property.

Monthly HOALeave at 0 if the property has no HOA or condo fee.

Monthly owner utilitiesOnly include utilities you pay as the owner.

Maintenance reserveAnnual reserve as a percentage of purchase price.

Management feePercentage of collected income paid to a manager.

Annual repairs reserveCapEx or turnover reserve beyond routine maintenance.

Other annual expensesLicensing, accounting, landscaping, or misc. owner costs.

Financing and upfront cash

These inputs drive debt service, cash flow, and cash-on-cash return.

Down paymentSet to 100% for an all-cash purchase.

Interest rateNominal annual mortgage rate.

Loan termTypically 15 or 30 years for residential rentals.

years

Closing costsLender fees, title, recording, and acquisition closing costs.

Upfront rehabOne-time renovation needed before the stabilized rent is achieved.

Stabilized cap rate

6.03%

The cap rate sits in a common long-term rental range. Financing terms and reserves will decide whether it is truly attractive.

Balanced yield

Net operating income: $19,291
Annual cash flow: $611
Cash-on-cash return: 0.66%
DSCR: 1.03x
Break-even occupancy: 93.21%
Gross yield: 10.69%

Annual underwriting stack

Gross potential income: $34,200
Vacancy loss: $1,710
Operating expenses: $13,199
Debt service: $18,680
Cash invested: $93,000

NOI includes vacancy and operating expenses, but excludes mortgage principal and interest. Cash-on-cash return uses annual cash flow divided by upfront cash invested.

Recent scenarios

Restore a previous underwriting run without retyping the assumptions.

0 stored

Submit the calculator or apply an example to save a scenario here.

Example scenarios

Use these as starting points, then swap in your local taxes, insurance, and financing.

Midwest duplex

$320k purchase with $2,800 rent and 25% down

A balanced long-term rental with professional management and modest rehab upfront.

About 6.0% cap rate and roughly $600 in annual cash flow at current rates

All-cash condo

$210k condo with $1,725 rent and no financing

A lower-complexity cash purchase where the main question is whether the in-place yield is enough.

About 5.1% cap rate and 4.8% cash-on-cash return after closing and rehab

Tight coastal deal

$540k purchase with $3,100 rent and 20% down

A property where debt service is the real issue even though headline rent looks substantial.

Under 4% cap rate and negative leveraged cash flow at current rates

How to read the outputs

The goal is not to maximize one headline number. Good underwriting checks whether the property still works after realistic vacancy, reserves, and financing costs.

NOI

Net operating income equals collected income minus operating expenses. It is the core measure used for cap rate and ignores financing.

Cap rate

Cap rate shows unlevered yield relative to purchase price. It helps compare markets and properties before deciding how to finance the deal.

Cash-on-cash

Cash-on-cash return uses after-debt cash flow divided by upfront cash invested. It is often more decision-useful than cap rate when leverage is involved.

Formula summary

Effective gross income = potential rent and other income x occupancy rate
NOI = effective gross income - operating expenses
Cap rate = NOI / purchase price
Cash flow = NOI - annual debt service
Cash-on-cash return = annual cash flow / upfront cash invested
Break-even occupancy = (operating expenses + debt service) / gross potential income

FAQ

What is the difference between rental yield and cap rate?

Gross rental yield usually compares annual rent to purchase price before vacancy and expenses. Cap rate is stricter: it uses net operating income after vacancy and operating expenses, but before financing.

Should mortgage payments be included in NOI?

No. Mortgage principal and interest belong below NOI. Financing is included later when calculating debt service, annual cash flow, DSCR, and cash-on-cash return.

What counts as operating expenses for a rental property?

Property taxes, insurance, HOA dues, owner-paid utilities, maintenance, management, repairs reserves, and recurring owner costs all belong in operating expenses. Income taxes, depreciation, and loan payments do not.

What is a good DSCR for a rental property?

Many lenders want DSCR at or above 1.20x to 1.25x. Below 1.00x means the property does not cover its own debt service from NOI.

How should I estimate vacancy?

Use stabilized occupancy instead of assuming 100% collection. In many long-term rental markets, 92% to 97% is a more realistic planning range depending on turnover, tenant quality, and local demand.

Use these calculators to pressure-test financing, compare ownership decisions, or move from property yield to full investment return.

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Disclaimer

This calculator is for planning and screening purposes. It does not model income taxes, depreciation, appreciation, refinance scenarios, tenant turnover timing, or local legal costs. Verify every assumption with current market data before buying a property.