Rental Property Tracker

Cap rate calculator

NOI = annual rental income − annual operating expenses
cap rate = NOI ÷ property value × 100

Cap rate is the return a property produces on its own value, before any financing. A property worth $300,000 that collects $30,000 a year in rent and costs $12,000 a year to run has a net operating income of $18,000, and a cap rate of 6.0%.

The mortgage was omitted intentionally. The operating costs include taxes, insurance, management, maintenance, and vacancies; however they do not include loan payments as the purpose of a capitalization (cap) rate is to evaluate the property itself versus the financing you used to acquire that property. This is why properties can be compared to one another through their cap rates -- the cap rate for a given building will be identical regardless if you purchased it with all cash or financed it 80%.

Which is also its limit. Cap rate tells you nothing about what actually lands in your account each month, and a leveraged property will usually show a lower cap rate alongside a much higher cash-on-cash return. Read the two together, never one alone. Every property you add here reports both.

How this tracker works

Each property's numbers run through the same math real estate investors use to evaluate a deal. Gross potential rent (monthly rent times 12) is reduced by your vacancy assumption to get effective gross income. Operating expenses, property tax, insurance, maintenance, a management fee if you use one, and HOA dues, are subtracted to get net operating income (NOI), the property's earnings before financing. Subtracting the mortgage payment (principal and interest only) from NOI gives annual cash flow. Cap rate is NOI divided by the property's value; cash-on-cash return is annual cash flow divided by the cash you actually put in.

A worked example, computed from the exact formula this page uses: a $300,000 property bought with $65,000 cash, renting for $2,000 a month at 5% vacancy, with $3,600 in annual property tax, $1,200 in annual insurance, $150 a month in maintenance, an 8% management fee and a $900 monthly mortgage payment, nets $14,376 in annual NOI and $3,576 in annual cash flow after the mortgage. That's a 4.8% cap rate and a 5.5% cash-on-cash return, two genuinely different numbers answering two different questions about the same property.

Why no bank linking, and what this doesn't do

Automated rental-property tracking tools utilizing bank transaction data will require account access information be provided to a third-party service provider, and may also require creation of an account (typically as part of a paid subscription) when managing multiple units. The described tool is a reverse approach, where all numbers are user inputted, updated at the time of actual changes to rent or expenses, and there is no opportunity to create any links and therefore no reason to create an account. As a deliberate decision, this tool does not perform depreciation calculations or tax return-related mathematical analysis that requires identifying both a specific ratio of building-to-land value for the subject property as well as the residential rental income recovery period of 27.5 years established by the Internal Revenue Service.

Use the mortgage & real estate payoff tracker with this one for extra payments, loan payoff timing and refinance of the loan itself; add a second entry for that loan in the mortgage & real estate payoff tracker using the "rental property" category on it so you can follow the loan payoffs against your cash flows generated from that rental property as shown by this tool. The value of most people's rental properties will be their highest number in the net worth tracker.