A walkthrough, end to end.
- 1
Enter purchase price, monthly rent, operating expenses (taxes, insurance, maintenance), and your down payment + financing details.
- 2
The calculator returns NOI, cap rate, gross rent multiplier, and cash-on-cash return.
- 3
Compare across deals to find the strongest investment math before going under contract.
Real estate investment metrics
NOI = annual rent − annual operating expenses (excluding mortgage). Cap rate = NOI / Price. GRM = Price / Gross Annual Rent. Cash-on-cash = annual cash flow after mortgage / cash invested. Each measures a different aspect of return.
What you can do with this.
Cap rate by market
Class-A urban apartments: 4–5% cap rate (low yield, low risk). Class-B suburban: 6–8%. Class-C / value-add: 8–12%. Lower cap rates mean higher prices for the same income — buyers are paying for stability.
Cash-on-cash return target
Buy-and-hold investors typically target 8%+ cash-on-cash for stabilized properties. Below 6% generally not worth the active management. Above 12% often indicates hidden risks (heavy maintenance, location issues).
Gross rent multiplier (GRM)
Quick screen: GRM = Price / Annual Rent. Markets typically run 8–15. Below 8 = strong cash flow; above 15 = appreciation play. NOT a full analysis but useful for fast comparison.
1% rule and 2% rule
1% rule: monthly rent ≥ 1% of purchase price. Roughly equivalent to 8% cap rate. 2% rule (rare in modern markets) suggests very strong cash flow. The calculator's GRM output is just the inverse.
House hacking math
Live in one unit, rent the others. Compute the calculator's metrics on rent from rented units only — your unit is 'free housing' rather than income. Often turns marginal deals into great ones.
Vacancy and operating expense reserves
Always model vacancy at 5–10% of rent. Maintenance + capex reserves: another 10–15%. Conservative pro formas avoid the typical newbie mistake of using 100% occupancy.
Leveraged vs. unleveraged returns
Cap rate is unleveraged (assumes no mortgage). Cash-on-cash uses your actual financing. Mortgage leverage amplifies both returns and losses — strongly positive in appreciating markets, painful when prices stagnate or fall.
Real estate calculator 2026 — what's current
With mortgage rates ~7%, many deals that worked in low-rate eras don't pencil today. Cap rates haven't risen as fast as rates, compressing investor returns. Run the math; don't assume the deal works.
Frequently asked.
Cap rate compares deals on equal footing (no leverage). Cash-on-cash measures YOUR actual return given how YOU finance it. Use cap rate to evaluate; cash-on-cash to size investment.
Higher than the risk-free rate by enough to justify management effort. With Treasuries at ~4.5%, deals under 6% cap need strong appreciation thesis to make sense.
Cap rate and cash-on-cash measure income only. Total return adds appreciation — historically 3% nominal/year for US residential real estate. Don't bake in heroic appreciation assumptions.
No. Calculations run entirely in your browser.