Rental Property Analyzer

Methodology

How these metrics are calculated.

• NOI = rental income (less vacancy) minus operating expenses — taxes, insurance, repairs, HOA, and management. NOI deliberately excludes the mortgage payment and the capital-expense reserve, matching standard underwriting practice.
• Cap rate = NOI ÷ purchase price.
• Cash flow= NOI minus the mortgage payment (principal & interest) minus the capital-expense reserve — the real bottom line.
• Cash-on-cash return= annual cash flow ÷ total cash invested (down payment plus closing costs — or just the down payment if you check “finance closing costs,” which rolls them into the loan instead, raising the loan amount and mortgage payment).
• DSCR = NOI ÷ annual mortgage payment — lenders commonly want this at 1.20 or higher.
• Depreciation = (purchase price − land value) ÷ 27.5 — the standard IRS straight-line recovery period for residential rental property. Land is never depreciable, which is why the calculator asks for a land-value percentage separately.
• Potential tax savings = annual depreciation × your entered tax rate — the value of that deduction sheltering an equal amount of income from tax.
• Property value in the year-by-year projection defaults to purchase price growing at your entered flat appreciation rate. Check “value the property using a cap rate” to switch to an income-approach valuation instead — that year’s NOI ÷ your entered valuation cap rate — so the modeled value tracks the property’s own income growth rather than an assumed market appreciation rate. A single cap rate is applied to every year; this does not model cap rates compressing or expanding over your holding period.
• Return on cash= (cash flow + that year’s property value change + that year’s loan principal paydown + the depreciation tax savings) ÷ total cash invested — pre-tax cash flow plus the tax savings as its own line, so the tax benefit is counted once, not twice. This combines the four components investors typically point to as the real sources of return from a rental — not just cash flow — into one number.

The year-by-year projection runs a real month-by-month amortization schedule, so principal paydown compounds — later years pay down more principal than earlier years, the way an actual mortgage works. Rent growth and expense inflation are entered separately, so operating costs don’t have to rise in lockstep with rent. One remaining simplification: depreciation is treated as a constant amount every year of the projection. This is a simplified estimate, not a substitute for a lender’s underwriting or an accountant’s projection.

The tax-savings figure is a narrow illustration of one benefit — depreciation’s tax shield — not a complete tax picture. It does not model mortgage-interest deductibility, passive-activity loss limitations (which can cap or disallow deducting rental losses against other income depending on your situation), depreciation recapture when you eventually sell (part of the benefit is generally repaid at sale), or the alternative minimum tax. Coordinate with a qualified tax professional before relying on this for a real decision.

Return on cash is a combined illustration, not spendable cash. Property value changes and loan paydown build equity, not cash in your account — you would need to sell or refinance to access them, and both involve their own costs and, for property value, no guarantee the market (or the assumed cap rate) holds. This metric answers “how hard is my cash working across all four channels,” not “how much cash will hit my bank account this year” — that narrower question is what cash-on-cash return above already answers.

Author: Todd McClean, Realtor® | Real Estate Investment Strategist, Mountainland Realty, Inc.. Reviewed July 21, 2026. This tool provides general real estate information and is not legal, tax, accounting, lending, securities, commodities, or financial-planning advice.