Rental Property Calculator 2021

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One of the most important things to know when considering an investment property is whether or not it will be earning a rate of return that is acceptable for you. Calculate your income and return on investment based on your property, financing, rent, and costs.

Purchase Information
Rental Income
Operating Expenses
Gross Income
Net Income
Return On Investment
Cap Rate

The return on investment of a rental property depends on more than just the purchase price of the property and the amount of rent that you collect every month. Other factors increase the cost of investment, such as if you are using a loan to finance your property purchase, the interest rate of your loan, and additional closing costs for the property.

Operating expenses can add up, such as property tax, insurance, and maintenance expenses. Your rental property might not be occupied all the time, so an estimated vacancy rate will also take away from your estimated monthly rent income.

Knowing these values, such as your estimated net income, return on investment, and capitalization rate, is key when deciding whether or not to rent out your property, and is crucial when comparing investment properties.

Net Income

Your income is based on rent payments that you receive. Rent payments can be affected depending on your vacancy rate. High vacancy rates will mean that your rent income will be lower. The vacancy rate can be estimated using industry averages, or from vacancy rates from comparable properties in similar neighbourhoods.

Net income is different depending on if you paid for your property with cash, or if you required financing to purchase your investment property, such as a mortgage.

If you bought your property with cash, your net income is simply your annual rental income subtracted by your operating expenses for the year.

If you financed your property, such as with a mortgage, then your net income is your annual rental income subtracted by your operating expenses and your mortgage payments. The mortgage payment includes both the mortgage principal and interest payment.

Operating Expenses

Operating expenses for a rental property are costs that you will have to pay to keep your rental property operating running. This includes property tax, insurance expenses, maintenance expenses, and depreciation.


For full-time rental properties, you will need a landlord policy. It is important to note that homeowners insurance is different from landlord insurance.

Homeowners insurance may cover personal property, such as furniture and clothing, whereas landlord insurance usually only covers items used to service your rental property, such as lawn mowers or snow blowers on site at your rental property. Tenants can cover their personal belongings through renters insurance. Renters insurance is paid by your tenants, and not directly by you.

Landlord insurance usually provides liability coverage to your rental property. If a tenant is hurt, then your liability coverage can cover expenses. Homeowners insurance only covers you and your relatives who live in your home, and does not cover tenants.

Financing Cost

If you are financing your investment property, you will have to pay interest on your loan. This can be in the form of interest on a mortgage.

How to Calculate ROI on a Rental Property

Return on investment (ROI) is a ratio between the return (profit) from an investment over the cost of the investment. This means that ROI shows how much you will make from your rental property as a percentage of the total cost per year, and can be used to see if your rental property is worth it.

A positive ROI figure means that you are making money, while a negative ROI will mean that you are losing money. Likewise, a higher ROI means that you are making more money per dollar invested, suggesting that your investment is producing fruitful returns. However, unreasonably high ROIs may prompt a second look.

To calculate the ROI of a rental property, you would first need to calculate your rental property’s net income and operating expenses. This can also include mortgage payments if you financed your rental property.

The ROI of a rental property that was paid in cash is your annual net income divided by your total investment.

The ROI of a rental property that was financed is your annual net income divided by the amount you put down for your investment. This amount is only your down payment plus closing costs, and not for the amount of your mortgage.

Borrowing to invest means that your ROI will be higher as your initial upfront cost is lower than paying in full with cash, but it also means that you are susceptible to mortgage rates and changes in the Prime Rate. High mortgage rates may eat away at your return on investment.

How to Calculate Cap Rate on a Rental Property

Capitalization rate, also known as the cap rate, measures your property’s annual return, and can be used to find out how long it will take for your investment to be paid back.

Casaplorer has a Cap Rate Calculator that you can use for your rental property.

Cap Rate vs ROI

Cap rate is based on the property being paid in full in cash. If your rental property was paid in cash, the cap rate of your rental property will be the same as your return on investment figure. If your rental property is financed, then you would use ROI instead of the cap rate.

How are Capital Gains Calculated on Sale of Rental Property

To calculate capital gains from your rental property sale, you will need to first calculate the cost basis of the property and the net proceeds from the sale of the property.

The cost basis is the cost of any improvements that you made to your rental property, such as remodels or a new roof, in addition to the original amount you paid for your rental property along with purchasing costs, such as closing costs and appraisal fees.

Net proceeds is your rental property sale price, with costs, subtracted, such as real estate agent commissions, staging, and lawyer fees.

To find the capital gain, you would subtract the total cost basis from your net proceeds. A positive capital gain would mean that you made money, while a negative capital gain would be a loss. Capital gains tax man apply.

Any calculators or content on this page is provided for general information purposes only. Casaplorer does not guarantee the accuracy of information shown and is not responsible for any consequences of its use.