The Ultimate Rental Property Calculator

The calculator above is a great resource to quickly check if a rental property has the potential to be a good investment, but is still missing some important information you’d want if you’re seriously evaluating a property for purchase.

If you’re interested in taking a deeper dive on a property, I built a more advanced calculator that also shows you:

• A breakdown of expenses by category
• Purchase and Pro-forma cap rates
• Income-to-Expense Ratio (the 1% rule)
• Gross Rent Multiplier
• Debt-Service-Coverage Ratio
• Charts that show projected income, expenses, and cash flow projections for the next 30 years
• The ability to add in leasing fees
• The ability to add in additional income

You can get this tool for free by clicking a link below – it takes you to a Google Sheet with this calculator. Simply make a copy of it, and you have an incredible resource to model investment properties!

Advanced Rental Property Calculator (free)

What Is a Good Return for a Rental Property?

When it comes to investing in real estate, a "good" return can be very different based on each individual investor and their goals.

Some investors are looking for cash flow, while others are simply looking to break even on cash flow and make their money through appreciation in value and tax write-offs.

My partner and I invest in the Melbourne and Brisbane market and our strategy is to mostly buy properties on "the fringe" — areas that have good cash flow with a lot of potential for appreciation in the next five or so years.

For these properties we’re aiming for above a 15% cash-on-cash return, and we’re looking for deals that we can refinance and pull out all of our capital once we finish renovations and leasing (the BRRRR Strategy).

However, when hunting for deals in nicer areas, I generally look for properties that meet the 1% rule, where monthly rents are 1% or greater than the purchase price of the property, and cash-on-cash returns are above 8.5%.

It’s worth noting that the 1% rule is just a guide and doesn’t apply to all markets. In fact, you should ignore it completely for anything that rents for less than $700, as you would want closer to a 1.5% or 2% number for a deal with lower rents to pencil out.