Long-term rental underwriting
Model mortgage financing, rental cash flow, operating expenses, projected equity, and the return from a future sale using one connected set of assumptions.
Decision question
What could remain after operating costs and debt service?
Projected property value, loan balance, equity, and cash flow over time.
Values at the end of year 10
Property value compounds the purchase price using the entered appreciation assumption. Loan balance is scheduled principal remaining. Equity is projected property value minus loan balance. The table after the chart provides the same values by year.
| Year | Property Value | Loan Balance | Equity | Annual Cash Flow | Cumulative Cash Flow |
|---|---|---|---|---|---|
| 0 | $300,000 | $240,000 | $60,000 | $0 | $0 |
| 1 | $309,000 | $237,562 | $71,438 | $1,446 | $1,446 |
| 2 | $318,270 | $234,948 | $83,322 | $2,172 | $3,618 |
| 3 | $327,818 | $232,145 | $95,673 | $2,921 | $6,540 |
| 4 | $337,653 | $229,139 | $108,514 | $3,696 | $10,235 |
| 5 | $347,782 | $225,916 | $121,866 | $4,495 | $14,731 |
| 6 | $358,216 | $222,460 | $135,756 | $5,321 | $20,052 |
| 7 | $368,962 | $218,754 | $150,208 | $6,174 | $26,227 |
| 8 | $380,031 | $214,780 | $165,251 | $7,056 | $33,282 |
| 9 | $391,432 | $210,519 | $180,913 | $7,965 | $41,248 |
| 10 | $403,175 | $205,950 | $197,225 | $8,905 | $50,153 |
Swipe horizontally to see all columns.
This forecast is an estimate based on the assumptions entered above. The separate exit analysis applies the submitted selling-cost assumptions to the selected year. Income taxes, refinancing, major unplanned expenses, and changes to the loan terms are not modeled.
Sale in year 10
Estimated sale proceeds are combined with each year's projected cash flow to measure the full holding-period return.
| Projected sale price | $403,175 |
|---|---|
| Less: remaining loan balance | -$205,950 |
| Less: selling costs | -$24,190 |
| Net sale proceeds | $173,035 |
The final-year IRR cash flow includes that year's operating cash flow plus net sale proceeds. Income taxes, capital-gains taxes, depreciation recapture, and unplanned costs are not modeled.
This calculator provides estimates and educational information for planning and comparison, not financial, investment, tax, legal, lending, or real estate advice.
Underwriting method
This rental property investment calculator connects operations, mortgage financing, equity growth, and a modeled exit without treating any one metric as the whole decision.
Primary formula
Annual cash flow = effective gross income − operating expenses − annual debt service
The down payment sets the initial loan amount, and the fixed rate and term determine principal-and-interest payments. Debt service reduces annual cash flow, while each scheduled payment also reduces the balance that must be repaid when the property is sold.
Scheduled rent and other income are reduced by vacancy to estimate effective gross income. Taxes, insurance, management, maintenance, capital reserves, HOA, utilities, and other entered costs reduce that income to NOI; mortgage debt service is then deducted to calculate rental property cash flow.
Cap rate divides NOI by purchase price and ignores financing. Cash-on-cash return divides annual cash flow after debt service by the down payment, closing costs, and initial repairs. Reading both helps separate property performance from the financing structure.
The forecast compounds the submitted appreciation rate to estimate property value and follows the loan amortization schedule to estimate remaining principal. Projected equity is value minus that balance, before selling costs and taxes.
The selected forecast horizon becomes the sale year. Projected sale price minus the remaining mortgage and selling costs produces net sale proceeds. Those proceeds are combined with yearly operating cash flows to estimate total cash received, profit, equity multiple, and IRR.
Brokerage, transfer, legal, concession, and closing costs can materially reduce proceeds. The calculator applies the percentage assumption to projected sale price, adds the fixed amount entered, and subtracts both before calculating investor returns.
IRR uses the timing of the initial investment, every projected annual cash flow, and final net sale proceeds. Unlike a simple ROI percentage, it discounts cash flows by period. If the submitted cash-flow pattern has no stable IRR solution, the result is shown as unavailable.
The model extends only the assumptions submitted. It excludes income and capital-gains taxes, depreciation recapture, refinancing, changes to loan terms, and unplanned major work, so compare conservative and optimistic cases rather than reading it as a promise.
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