## About Lofty

Lofty is a fractional U.S. real estate investing platform where visitors can browse property shares, learn about rental property investing, review calculators and guides, and access support for marketplace orders and account activity.

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## Rental Property Calculator

Run a complete rental property cash flow analysis: monthly cash flow, ROI, cap rate, cash-on-cash return, DSCR, the 1% rule, break-even occupancy, and a year-by-year projection.

## Your numbers

### Property

- Purchase price
- Closing costs
- Loan, title, inspection, and transaction costs.
- Upfront repairs

### Income

- Monthly rent
- Other monthly income (Parking, laundry, pet fees, etc.)

### Expenses

- Vacancy rate% (BiggerPockets recommends 8–10% as conservative)
- Monthly operating expenses (Taxes, insurance, repairs, HOA, utilities, and CapEx reserves)
- Property management% (8–12% of rent is typical. Set to 0% if self-managed.)

### Financing

- Down payment% = $62,500 cash
- Interest rate%  
- Loan term yrs

### Long-term assumptions

#### Overview

## What is a rental property calculator?

A rental property calculator estimates a property's monthly cash flow, ROI, cap rate, cash-on-cash return, and long-term return from purchase price, rent, financing, vacancy, and operating expenses. Investors use it to compare properties, estimate rental income, and avoid negative cash flow.

## What your scenario is telling you

### Healthy monthly cash flow

Estimated monthly cash flow is $286, leaving room to absorb a vacancy or repair.

### Lender-friendly DSCR

DSCR of 1.23x clears the typical 1.20x to 1.25x DSCR-loan threshold.

### Passes the 1% rule

Monthly rent is 1.02% of purchase price, clearing the classic 1% screen.

## Cash flow, equity, and ROI over time

| Year | Gross income | Op. expenses | NOI | Cash flow | Property value | Loan balance | Equity | Cum. ROI |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1 | $30,600 | $9,752 | $18,400 | $3,431 | $257,500 | $185,595 | $71,905 | -17.4% |
| 2 | $31,518 | $10,007 | $18,989 | $4,020 | $265,225 | $183,553 | $81,672 | 1.0% |
| 3 | $32,464 | $10,269 | $19,597 | $4,628 | $273,182 | $181,363 | $91,819 | 20.7% |
| 4 | $33,437 | $10,538 | $20,225 | $5,255 | $281,377 | $179,015 | $102,362 | 41.8% |
| 5 | $34,441 | $10,813 | $20,872 | $5,903 | $289,819 | $176,497 | $113,322 | 64.4% |
| 6 | $35,474 | $11,096 | $21,539 | $6,570 | $298,513 | $173,797 | $124,716 | 88.4% |
| 7 | $36,538 | $11,387 | $22,228 | $7,259 | $307,468 | $170,901 | $136,567 | 114.0% |
| 8 | $37,634 | $11,685 | $22,938 | $7,969 | $316,693 | $167,797 | $148,896 | 141.3% |
| 9 | $38,763 | $11,991 | $23,671 | $8,702 | $326,193 | $164,468 | $161,725 | 170.2% |
| 10 | $39,926 | $12,305 | $24,427 | $9,458 | $335,979 | $160,898 | $175,081 | 200.9% |
| 11 | $41,124 | $12,627 | $25,207 | $10,237 | $346,058 | $157,071 | $188,988 | 233.3% |
| 12 | $42,358 | $12,958 | $26,011 | $11,041 | $356,440 | $152,966 | $203,474 | 267.7% |
| 13 | $43,628 | $13,298 | $26,840 | $11,871 | $367,133 | $148,565 | $218,568 | 304.0% |
| 14 | $44,937 | $13,646 | $27,696 | $12,727 | $378,147 | $143,846 | $234,302 | 342.3% |
| 15 | $46,285 | $14,004 | $28,579 | $13,609 | $389,492 | $138,785 | $250,706 | 382.8% |

## How investors usually read these numbers

| Metric | Often strong | Watch out | Why it matters |
| --- | --- | --- | --- |
| Cash-on-cash return | 8% to 12%+ | Below 5% | Shows annual cash flow compared with the cash you actually invested. |
| Cap rate | 6% to 8%+ | Below local borrowing costs | Compares property income before debt across markets and property types. |
| DSCR | 1.25x or higher | Below 1.0x | Shows whether NOI covers annual debt service with a cushion. |
| 1% rule | Near or above 1.0% | Below 0.6% | Quickly compares monthly rent to purchase price before deeper underwriting. |
| Break-even occupancy | 15+ points below expected occupancy | Near expected occupancy | Estimates how much rent income can fall before the property stops cash flowing. |

## How to run a rental property analysis

1. **Enter property details**  
   Fill in purchase price, closing costs, and any upfront repairs you expect to fund out of pocket.  
2. **Add rental income**  
   Set the monthly rent based on local comps, plus any other income such as parking or pet fees.  
3. **Estimate operating expenses**  
   Include vacancy, taxes, insurance, HOA dues, repairs, reserves, and property management.  
4. **Set financing terms**  
   Enter down payment, interest rate, and loan term. Investment-property loans usually need 20% to 25% down.  
5. **Add long-term assumptions**  
   Choose rent growth, expense growth, appreciation, hold period, and selling costs to model the 30-year projection.  
6. **Read the snapshot and projection**  
   Review monthly cash flow, ROI, cap rate, cash-on-cash return, DSCR, the 1% rule, break-even occupancy, and the year-by-year table.

## The math behind the result

### Core formulas

- Effective rent = monthly rent x (1 - vacancy rate).
- Monthly cash flow = effective rent + other income - operating expenses - property management - mortgage payment.
- Cap rate = annual NOI / purchase price.
- Cash-on-cash return = annual cash flow / cash invested (down payment + closing + repairs).
- DSCR = annual NOI / annual debt service. Lenders typically want at least 1.20x to 1.25x.
- 1% rule = monthly rent / purchase price. A quick screen, not a verdict.

### Expert takeaways

- Use cap rate to compare properties without financing noise. Use cash-on-cash return to test your actual leverage.
- Check DSCR before you fall in love with a deal. A property can have a strong cap rate and still struggle to cover debt.
- The 1% rule is a screen, not a rule. A deal under 1% can still work in high-appreciation markets if cash flow holds.
- Stress-test rent and vacancy together. Rents can stay flat while taxes, insurance, and maintenance keep climbing.

## Key terms in plain English

- **Cap rate**: Annual NOI / purchase price. Capitalization rate measures the unleveraged yield of a rental property. 
- **NOI**: Net operating income equals gross rent minus vacancy and operating expenses. 
- **Cash-on-cash return**: Annual cash flow divided by cash invested.
- **DSCR**: NOI divided by annual debt service.
- **1% rule**: Monthly rent should be at least 1% of a property's purchase price.

## People also ask

1. **What is a rental property calculator?**  
   A rental property calculator is a tool that estimates a rental property's monthly cash flow, ROI, cap rate, cash-on-cash return, DSCR, and long-term return from purchase price, rent, financing, vacancy, and operating expenses.
2. **How do you estimate rental property cash flow?**  
   Start with gross monthly rent, subtract a vacancy allowance, then subtract operating expenses, property management, reserves, and the mortgage payment.
3. **How do you calculate ROI on a rental property?**  
   For a financed rental, ROI is usually measured as cash-on-cash return: annual cash flow divided by upfront cash invested.
4. **What is a good ROI for rental property?**  
   A good rental property ROI depends on the market, leverage, and risk.
5. **What is a good cap rate for a rental property?**  
   A "good" cap rate depends on the market, but many U.S. residential investors target 6% to 8% in Class B and C markets.