Real Estate Calculator
Calculate cap rate, cash-on-cash return, and gross rental multiplier (GRM) for a rental property investment.
Calculator Inputs
Sets the currency this calculator's numbers are denominated in. This is presentation only — it does NOT convert your numbers between currencies, it only changes how they're formatted.
The property's purchase price.
Down payment as a percentage of purchase price. Use 100% for an all-cash purchase.
One-time upfront repair or renovation costs, added to total cash invested.
Gross monthly rent you expect to collect.
Property taxes, insurance, maintenance, and management combined, excluding loan payments.
Total annual loan payments (principal + interest). Enter 0 for an all-cash purchase.
- Cap Rate
- 9%
- Cash-on-Cash Return
- 18%
- Gross Rental Multiplier
- 8.33
- Annual Net Operating Income
- $18,000.00
- Total Cash Invested
- $50,000.00
- Annual Cash Flow (After Debt Service)
- $9,000.00
About these results
CalcSpectrum calculators produce automated estimates using established formulas and the specific values you enter. Because real-world outcomes depend on input accuracy, mathematical assumptions, and rounding conventions, please verify critical figures with an appropriately qualified financial, tax, medical, legal, or other professional, as relevant.
Financial Notice: These figures are informational estimates for personal planning only. They do not constitute financial, investment, tax, or legal advice, nor do they represent a lending offer or credit approval. Provider and financial institution figures, rates, fees, and underwriting requirements may differ.
How It's Calculated
Formula
This calculator computes three standard direct-ratio metrics real estate investors use to evaluate a rental property, without needing to solve anything numerically — every figure is a straightforward division. Net Operating Income (NOI) is annual rent minus annual operating expenses (taxes, insurance, maintenance, management), excluding loan payments. Cap rate compares NOI to the purchase price, showing the property's return as if it were bought entirely in cash. Cash-on-cash return instead compares the actual annual cash flow (NOI minus debt service) to the cash you actually put in (down payment plus rehab costs), showing the return on your real out-of-pocket investment. The gross rental multiplier (GRM) is a quick, expense-agnostic screening ratio: purchase price divided by annual gross rent — lower is generally more favorable, but GRM ignores expenses entirely, so it's a first-pass filter, not a substitute for cap rate or cash-on-cash return.
Worked Examples
$200,000 property, 20% down, $10,000 rehab, $2,000/month rent, $500/month expenses, $9,000/year debt service
- Annual NOI: (2,000 − 500) × 12 = $18,000
- Cap rate: 18,000 / 200,000 × 100 = 9%
- Total cash invested: (200,000 × 0.20) + 10,000 = 40,000 + 10,000 = $50,000
- Annual cash flow: 18,000 − 9,000 = $9,000
- Cash-on-cash return: 9,000 / 50,000 × 100 = 18%
- GRM: 200,000 / (2,000 × 12) = 200,000 / 24,000 ≈ 8.33
All-cash purchase: $100,000 property, 100% down, no rehab, $1,000/month rent, $200/month expenses
- Annual NOI: (1,000 − 200) × 12 = $9,600
- Total cash invested: 100,000 × 1.00 = $100,000
- Annual cash flow: 9,600 − 0 (no debt service) = $9,600
- Cash-on-cash return: 9,600 / 100,000 × 100 = 9.6% — equal to the cap rate here, since there's no financing
Frequently Asked Questions
Why is cap rate different from cash-on-cash return?
Cap rate ignores financing entirely — it measures the property's return as if bought with all cash. Cash-on-cash return accounts for financing: it compares the actual cash flow left after loan payments to the actual cash you invested (down payment plus rehab), which is usually a much smaller amount than the full purchase price. Cash-on-cash is typically higher than cap rate when a property is financed and cash flow is positive, because leverage amplifies the return on your smaller cash outlay.
What should I enter for 'Annual Debt Service' if I haven't gotten a loan yet?
Enter your expected total annual loan payments (principal + interest). If you don't know that figure yet, calculate it first with the Mortgage Calculator or Loan Calculator using your expected loan amount, rate, and term, then enter the resulting annual payment total here. Enter 0 if you're buying entirely in cash.
Can cash-on-cash return be negative?
Yes — if annual debt service exceeds NOI, the property has negative cash flow, which produces a negative cash-on-cash return. That's a valid, meaningful result: it means the property is costing you money each year beyond what the rent covers.
What counts as a 'good' cap rate or cash-on-cash return?
There's no universal answer — acceptable figures vary significantly by market, property type, and risk tolerance, and higher isn't automatically better since higher returns often come with higher risk or a less desirable location. This calculator reports the figures; interpreting what's 'good' for your situation is a judgment call outside its scope.