By Jessica Martinez, Contributing Writer, Business & FinanceUpdated July 9, 2026
A rental that looks fine on the listing sheet can still lose money once every expense line actually lands. This guide walks through the four metrics this site calculates and how they fit together into one screening pass.
Real Cash Flow Comes First
Gross rent is a starting figure, not an answer. Once taxes, insurance, management, maintenance, vacancy and debt service are subtracted, a property that looked promising on paper can turn negative. The Rental Property Calculator runs the full model so the actual cash flow number is the first thing you see, not the last thing you calculate by hand. A property with negative cash flow can still make sense, but only if you are consciously betting on appreciation to cover the gap.
Cap Rate Tells You the Yield, Ignoring Financing
Cap rate divides NOI by price. Because financing plays no role in the formula, it lets you rank several properties on equal footing before you have loan quotes for any of them. The Cap Rate Calculator computes it instantly. Higher cap rates generally mean more income per dollar of price, often paired with more management intensity or more risk. Lower cap rates tend to show up in stable, higher-priced markets where buyers accept a thinner current yield.
Cash-on-Cash Return Adds Your Actual Financing Back In
Most landlords use a loan, so cap rate is only half the picture. Cash-on-cash return divides annual pre-tax cash flow by the cash you actually put in: down payment, closing costs, and any upfront repairs. The Cash-on-Cash Calculator handles the math. It is the number that captures the leverage effect cap rate deliberately leaves out.
The 1% Rule Is a Screen, Not a Verdict
The 1% rule checks whether monthly rent reaches at least 1 percent of purchase price. On a $260,000 property, that means $2,600 per month. The 1% Rule Calculator checks it with two fields. Treat it as a filter for deciding whether a listing deserves a deeper look, not a promise of positive cash flow. Plenty of strong markets regularly fall short of 1 percent, and clearing it does not guarantee the full numbers will work once every expense lands.
Underwrite the Way You Would Want a Buyer to Underwrite Your Own Rental
Use rents you can verify, not rents you hope for. Budget for vacancy and for a major repair, not just routine maintenance. Stress-test against a rate 1 to 2 percentage points higher and rent 10 percent lower than today's figures. A deal built entirely on optimistic assumptions is a plan for funding someone else's exit, not your own return. Confirm every input against your own local market before committing capital.
The Four Calculators, One Line Each
- Rental Property Calculator: full cash flow, cap rate, cash-on-cash return and total ROI, with vacancy and expenses built in.
- Cap Rate Calculator: NOI divided by price, with implied value at common benchmark cap rates.
- Cash-on-Cash Calculator: return on the cash you actually deployed, down payment included.
- 1% Rule Calculator: the fast screen that tells you whether a listing is worth a deeper look.
Quick Answers
Which metric matters most when screening a listing?
Real cash flow after every expense and debt payment first, then cap rate for comparing properties, then cash-on-cash for measuring what your specific down payment is earning.
What does cap rate actually measure?
Annual net operating income divided by purchase price, an all-cash yield that lets you compare properties without any financing assumptions attached.
What does cash-on-cash return measure?
Annual pre-tax cash flow divided by total cash invested, meaning the down payment, closing costs and any upfront repairs.
What exactly is the 1% rule checking?
Whether monthly rent reaches at least 1 percent of purchase price. A useful first filter, never a substitute for running the full numbers.
Is anything on this page investment advice?
No. These four metrics are a starting point for your own research; verify every input with local data before making an actual investment decision.