A worked example
A $250,000 property with 25% down, renting for $2,200 a month, nets about $123 in monthly cash flow once a 5% vacancy allowance, 10% management fee, maintenance, taxes and insurance are all factored in — a cash-on-cash return of roughly 2.35%.
Frequently asked questions
Why include a vacancy rate if the unit is currently occupied?
Tenants eventually move out, and the unit sits empty between leases — modeling an average vacancy rate (often 5-8%) builds that inevitable gap into your numbers rather than assuming 100% occupancy forever.
Do I need a property manager to use the management fee field?
No — set it to 0% if you self-manage. But it's worth factoring in even then, since your own time managing the property has a real opportunity cost, even if no check changes hands for it.
What's a healthy cash-on-cash return for a rental?
It varies by market and risk tolerance, but many investors target somewhere in the 6-12% range as a rough benchmark — though markets with strong appreciation potential sometimes accept lower current cash flow in exchange.
This calculator provides estimates for general informational purposes only and is not investment advice.