Rental Property Cap Rate, NOI, and Cash-On-Cash
Calculators

It helps you evaluate net operating income (NOI), capitalization rate (cap rate), and cash-on-cash return (CoC) using your rental income, operating expenses, purchase price, and financing assumptions. Use the results to screen long-term rental investments and compare scenarios. They are estimates based on your entries, not market forecasts, appraisals, or guaranteed returns.

Annual NOI equals effective annual property income minus annual operating expenses. Effective income reflects vacancy and collection losses where modeled. Operating expenses are the costs of running the rental property. Mortgage payments, income taxes, depreciation, and major capital improvements are generally excluded from NOI. NOI measures property operations before financing, rather than the cash available to the owner.

Typical operating expenses include property taxes, insurance, routine repairs and maintenance, property management fees, owner-paid utilities, and recurring HOA or condo dues. Include each cost once. Separate major replacements and special assessments from ordinary operating costs, and check how the model treats them. Missing expenses can overstate both NOI and cap rate.

Cap rate equals annual NOI divided by the property’s purchase price, multiplied by 100. For example, $24,000 in annual NOI on a $400,000 purchase price produces a 6% cap rate. This compares operating income with price before financing. It is not the same as cash-on-cash return, total investment return, or appreciation.

Cash-on-cash return equals annual pre-tax cash flow divided by actual cash invested, multiplied by 100. Annual pre-tax cash flow reflects operating income after debt service and any additional cash outflows included in the model. For example, $8,000 in annual pre-tax cash flow on $100,000 invested produces an 8% cash-on-cash return.

Cash invested generally includes your down payment or cash purchase amount, cash-paid closing costs, and upfront renovation or setup costs. Include initial reserves when they form part of the cash committed to your scenario. Borrowed funds are not your cash contribution. Review the calculator’s cash-investment definition and avoid counting the same cost twice.

Mortgage principal and interest payments do not reduce NOI or cap rate. They reduce the cash flow used to calculate cash-on-cash return. Changing loan terms or the down payment can therefore change CoC without changing NOI or cap rate, if income, operating expenses, and purchase price stay the same. Avoid counting escrowed taxes and insurance twice.

Vacancy and unpaid rent reduce effective income, which can lower NOI, cap rate, and cash-on-cash return. Many expenses continue even when a unit is empty, including taxes, insurance, and loan payments. Compare a realistic base case with a lower-occupancy scenario instead of assuming every scheduled rent payment will be collected throughout the year.

Major replacements, such as a roof or HVAC system, are generally capital expenditures rather than routine operating expenses. Replacement reserves are commonly shown separately from NOI, although underwriting conventions vary. They can reduce cash available to the owner even when NOI remains positive. Check whether the model deducts reserves or capital costs separately before interpreting cash flow or CoC.

There is no single target that fits every South Florida rental property. Compare similar properties using consistent assumptions, then weigh condition, location, tenant demand, financing, and ongoing ownership costs. A higher projected return can come with higher risk. Stress-test rent, vacancy, insurance, and repairs before deciding whether a property meets your investment goals.

Cap rate compares annual NOI with purchase price. CoC compares annual pre-tax cash flow with your cash invested. Financing changes both cash flow and the amount of cash you contribute, so the percentages can differ significantly. Even an all-cash purchase can produce different results when closing costs, upfront improvements, or reserves are included in cash invested.

Yes. A rental can earn more income than its operating expenses yet generate negative cash flow after mortgage payments, capital spending, or reserves. Positive NOI alone does not mean the property can support its financing or provide owner distributions. Review the projected cash shortfall and test more conservative assumptions before committing additional cash.

NOI, cap rate, and CoC do not provide a complete lifetime investment return. These metrics do not capture appreciation, resale proceeds, or personal income-tax benefits; CoC also does not count loan principal paydown as cash received. This page focuses on long-term rental screening. For seasonal revenue and short-term rental costs, use the Vacation Rental Calculator.

Check comparable long-term rents, expected vacancy, property taxes, insurance quotes, HOA or condo dues, pending assessments, and repair needs. For properties in Broward or Miami-Dade, share the address and your assumptions through ACCRIVE’s Free Rental Analysis form. To discuss acquisition, management, or an existing property’s performance, schedule a consultation.