Long-term rental underwriting
Model rental cash flow, break-even rent and occupancy, target returns, vacancy sensitivity, operating expenses, financing, equity, and a future sale using one connected set of assumptions.
Decision question
What rent is needed, and how much downside can the deal absorb?
Decision analysis
These reverse calculations and scenarios use the same submitted income, expense, financing, and cash-investment model as the investment summary.
The minimum gross rent and occupancy needed for monthly cash flow to reach zero.
Optional rent targets based on the target fields in the submitted snapshot.
The distance from the submitted rent and occupancy to their modeled break-even points.
Only monthly rent changes; vacancy, operating expenses, financing, and cash invested remain at the submitted assumptions.
| Scenario | Monthly Rent | NOI | Monthly Cash Flow | Annual Cash Flow | Cash-on-Cash | Status |
|---|---|---|---|---|---|---|
| −20% | $2,200.00 | $15,465.60 | -$307.93 | -$3,695.11 | -5.36% | Negative |
| −10% | $2,475.00 | $18,036.30 | -$93.70 | -$1,124.41 | -1.63% | Negative |
| Base | $2,750.00 | $20,607.00 | $120.52 | $1,446.29 | 2.1% | Positive |
| +10% | $3,025.00 | $23,177.70 | $334.75 | $4,016.99 | 5.82% | Positive |
| +20% | $3,300.00 | $25,748.40 | $548.97 | $6,587.69 | 9.55% | Positive |
Each cell shows monthly cash flow and a text status. Vacancy changes are clamped between 0% and 100%.
| Rent | Base − 4 pp1% vacancy | Base − 2 pp3% vacancy | Base5% vacancy | Base + 2 pp7% vacancy | Base + 4 pp9% vacancy |
|---|---|---|---|---|---|
| −20% | -$235.77Negative | -$271.85Negative | -$307.93Negative | -$344.01Negative | -$380.09Negative |
| −10% | -$12.52Negative | -$53.11Negative | -$93.70Negative | -$134.29Negative | -$174.88Negative |
| Base | $210.72Positive | $165.62Positive | $120.52Positive | $75.42Positive | $30.32Positive |
| +10% | $433.97Positive | $384.36Positive | $334.75Positive | $285.14Positive | $235.53Positive |
| +20% | $657.21Positive | $603.09Positive | $548.97Positive | $494.85Positive | $440.73Positive |
The stress factor applies to tax, insurance, management, maintenance, capital reserves, HOA, utilities, and other recurring operating expenses. Mortgage and acquisition costs do not change.
| Costs | Monthly Operating Expenses | NOI | Monthly Cash Flow | Cash-on-Cash |
|---|---|---|---|---|
| Base | $895.25 | $20,607.00 | $120.52 | 2.1% |
| +5% | $940.01 | $20,069.85 | $75.76 | 1.32% |
| +10% | $984.78 | $19,532.70 | $31.00 | 0.54% |
| +20% | $1,074.30 | $18,458.40 | -$58.53 | -1.02% |
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.
Break-even method
Break-even analysis reverses the same operating and financing model used for the calculator’s current cash-flow result.
Conceptual formula
Break-even rent → monthly cash flow = $0
Break-even rent is the minimum gross monthly rent needed to cover operating expenses and scheduled debt service under the selected assumptions. At that rent, modeled monthly cash flow is approximately zero—not a profit target and not a prediction of market rent.
Conceptually, required rent must support vacancy loss, fixed operating costs, percentage-based expenses, and the mortgage payment. Because several expense allowances change with effective income, this calculator searches for the lowest rent that makes its full production cash-flow result reach zero.
Break-even occupancy is the minimum occupied share needed at the current gross rent for cash flow to reach zero. Occupancy equals 100% minus vacancy. If the property still loses money at 100% occupancy, break-even is not achievable at the current rent.
There is no universal dollar amount. An acceptable cash-flow result depends on capital invested, financing, market conditions, property risk, reserve needs, and the investor’s objectives. Compare the actual cash flow with cash-on-cash return, downside scenarios, and the property’s available cushion.
Start with break-even rent: any increase above that point produces positive modeled cash flow while the other assumptions remain fixed. For a specific dollar goal, enter Target Monthly Cash Flow to solve for the gross rent required to reach it.
Cash-on-cash return is annual pre-tax cash flow divided by total initial cash invested. The target solver keeps the submitted down payment, closing costs, repairs, financing, and operating assumptions, then finds the rent at which that existing ratio reaches the requested percentage.
Higher vacancy reduces effective gross income. In this model it also reduces management, maintenance, and capital-reserve allowances because those costs are percentages of effective income. The rent × vacancy matrix recomputes every cell through that full relationship.
Higher taxes, insurance, management, maintenance, reserves, HOA, utilities, or other recurring costs reduce NOI, cash flow, and cash-on-cash return. The operating-cost stress test increases those categories while leaving the mortgage and purchase costs unchanged.
Rent cushion is current rent minus break-even rent; occupancy cushion is current occupancy minus break-even occupancy. Positive cushions show how far the submitted assumptions can move before modeled cash flow crosses zero. A shortfall shows the amount needed merely to reach break-even, not an investment recommendation.
Worked example
Every result below is generated from the shared rental calculation engine and reverse-calculation helpers.
Consider a $320,000 rental purchased with 25% down, $8,000 of initial repairs, and a 6.75% fixed mortgage. Gross monthly rent is $2,950, other income is $100, and vacancy is 6%. Annual tax and insurance total $6,000; management is 8%, maintenance is 5%, reserves are 5%, and owner-paid utilities plus other expenses are $125 per month.
| Metric | Result | Meaning |
|---|---|---|
| Net operating income | $20,711.28 | Effective income minus operating expenses, before financing |
| Monthly mortgage payment | $1,556.64 | Scheduled principal and interest |
| Monthly cash flow | $169.30 | NOI after debt service, divided by 12 |
| Break-even monthly rent | $2,730.36 | Gross rent needed for approximately $0 monthly cash flow |
| Break-even occupancy | 87.23% | Minimum occupancy at the current gross rent |
| Rent for $500 monthly cash flow | $3,379.07 | Submitted operating and financing assumptions held constant |
| Monthly Rent | Monthly Cash Flow | Cash-on-Cash Return |
|---|---|---|
| $2,360.00 | -$285.47 | -3.51% |
| $2,655.00 | -$58.08 | -0.71% |
| $2,950.00 | $169.30 | 2.08% |
| $3,245.00 | $396.69 | 4.88% |
| $3,540.00 | $624.08 | 7.67% |
Continue the analysis
Use this page for connected property underwriting; use the focused tools when one metric needs a deeper standalone calculation.
Isolate unlevered yield with the Cap Rate Calculator, measure invested-cash efficiency with the Cash-on-Cash Return Calculator, test lender-style coverage with the DSCR Calculator, or inspect amortization and payment details in the Mortgage Payment Calculator.
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