Rental Property Cash Flow & Cap Rate Calculator

How the rental property cash flow & cap rate calculator works

Effective gross income equals scheduled rent after the entered vacancy/collection loss plus separately entered other income. The loss percentage applies only to rent. Defined NOI here is effective gross income less entered property operating expenses, before financing and reserve funding.

Cash after reserves and debt subtracts those two amounts after NOI. Cap rate is this stated pre-financing NOI divided by entered property price. Zero price makes the cap-rate denominator unavailable. Income, expenses, reserves and debt should use compatible periods and classifications; money components round to cents as calculated.

NOI and reserve definitions vary by lender and appraisal method. The tool does not select an accounting policy, value the property, estimate market income, calculate income tax or determine underwriting eligibility. Negative NOI and cash flow are retained rather than hidden.

Worked example

Rent of 120,000 less 10% loss plus 5,000 other income gives 113,000 effective income. Deducting 40,000 operating expenses gives 73,000 defined NOI. After 5,000 reserves and 30,000 debt service, cash is 38,000. Against price 500,000, the stated cap rate is 14.6%. At 20% rent loss, NOI becomes 61,000 and cash becomes 26,000.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• Fannie Mae: property cash-flow and DSCR definition context
• CFI: discounted cash flow formula and terminal assumptions