Net Rental Income Calculator
Collecting $2,000 in rent is not earning $2,000. Vacancy takes its share first, then property taxes, insurance, maintenance, management and the rest take theirs, and many landlords find their “profitable” property nets a few hundred dollars a month, or nothing, once every line is counted. This calculator counts every line: enter the monthly rent, a vacancy rate and each expense category, then optionally add the mortgage payment and the property value to get true cash flow and the cap rate investors use to compare properties.
Net rental income here is before income tax and before mortgage principal paydown. Cash flow after mortgage is the spendable monthly surplus.
Quick Answer
A property renting for $2,000 a month at 5% vacancy with $800 of monthly operating expenses nets $1,100 a month, or $13,200 a year, a cash-flow margin of 57.89%. After a $700 mortgage payment the spendable cash flow is $400 a month, and on a $260,000 value the cap rate is 5.08%. Those four numbers are the worked example pre-filled in the calculator above.
Key takeaways
- Gross rent is a marketing number. Net rental income, after vacancy and every operating line, is the number a property actually earns.
- The mortgage is not an operating expense. It belongs in the cash-flow line, one step below net income, which is why the two figures can point in opposite directions.
- The nine-line breakdown is the diagnostic tool: when a deal disappoints, one line is usually the leak, and the breakdown names it.
- Nothing here includes income tax or depreciation. This is the operating picture, the one you compare across properties before tax enters the conversation.
- Quick Answer
- How to use the net rental income calculator
- The formulas: from gross rent to cap rate in six steps
- Worked example: a $2,000 rent that pays out $400
- Reading the margin: what the badge bands mean
- The expense lines landlords undercount most
- What this calculator deliberately leaves out
- What competing calculators miss
- Frequently asked questions
- Add This Calculator to Your Website
- References
How to use the net rental income calculator
Enter the monthly rent, a vacancy rate and each monthly expense, then click Calculate. Add the mortgage payment for cash flow and the property value for the cap rate, or leave those two out.
- Start with the lease rent. Use the full monthly rent, all units combined on a multi-unit property. Vacancy comes off separately in the next box, so do not pre-discount the rent.
- Set a vacancy rate you can defend. Five percent is roughly two and a half empty weeks a year. Owners should use their own trailing twelve months; buyers can sanity-check the rate against the rental vacancy data in the Census Bureau’s Housing Vacancies and Homeownership survey.
- Fill every expense line in monthly terms. Annual bills get divided by 12. Blank and zero are treated the same by the tool, both count as $0, so a line you skip is a cost you have assumed away.
- Add financing and value only if you want those readings. The cash-flow row appears only when a mortgage payment above $0 is entered, and the cap-rate row only when a value above $0 is entered. No payment entered does not mean no payment exists.
One trap deserves its own sentence: if your mortgage payment escrows taxes and insurance, and you also enter taxes and insurance as expense lines, you have counted them twice. Either strip the escrow part out of the payment you enter, or leave the expense lines to carry them and treat the cash-flow line as approximate. Lenders face the same netting question, and Fannie Mae’s guidance on general rental income information spells out how qualifying income treats the full housing payment so it is never double counted in underwriting.
The formulas: from gross rent to cap rate in six steps
Six short formulas produce every figure on the results panel. Net rental income itself is step four: adjusted income minus total operating expenses.
Adjusted rental income = Rent − Vacancy loss
Total expenses = Taxes + Insurance + Maintenance + Management + Utilities + Advertising + HOA + Other
Net monthly income = Adjusted income − Total expenses
Net annual income = Net monthly × 12
Cash-flow margin = Net monthly ÷ Adjusted income × 100
Cash flow after mortgage = Net monthly − Mortgage payment
Cap rate = Net annual ÷ Property value × 100
Two details in that list are worth knowing because other tools quietly differ. First, the margin divides by adjusted income, the rent actually collected after vacancy, not by gross rent. A margin measured against money you never received would flatter every deal. Second, the cap rate uses the same net annual income the page computes, with no financing inside it, which matches how appraisers and lenders define the rate. If you are working the rate backwards from a target return, the cap rate calculator solves for value and required income as well. And if you need the payment itself rather than a payment you already know, the mortgage payment calculator builds it from loan amount, rate and term.
Worked example: a $2,000 rent that pays out $400
The pre-filled example is a single rental at $2,000 a month, 5% vacancy, and $800 of monthly expenses split as taxes $200, insurance $100, maintenance $150, management $200, utilities $0, advertising $50, HOA $0 and other $100, with a $700 mortgage payment on a $260,000 property.
| Line | Per month | Share of collected rent |
|---|---|---|
| Adjusted rental income | $1,900.00 | 100.00% |
| Property taxes | $200.00 | 10.53% |
| Property management | $200.00 | 10.53% |
| Maintenance and repairs | $150.00 | 7.89% |
| Insurance | $100.00 | 5.26% |
| Other expenses | $100.00 | 5.26% |
| Advertising and marketing | $50.00 | 2.63% |
| Net rental income | $1,100.00 | 57.89% |
Read the table the way an owner would. Taxes and management together take $400, exactly as much as the owner keeps after the mortgage. Maintenance at $150 is the third line, and it is the one most likely to be understated in a seller’s listing, because a fresh coat of paint hides a decade of deferred work. If real maintenance runs $250 instead, net income falls to $1,000 and cash flow to $300: still positive, a quarter thinner. That sensitivity check, changing one line at a time, is the honest way to use this tool on a property you do not own yet. For a fuller purchase screen that adds financing terms, returns and a vacancy stress test, work through the buying rental property calculator after this one.
Reading the margin: what the badge bands mean
The cash-flow margin is the share of collected rent that survives operating expenses, and the badge under your result sorts it into four bands. The bands are this page’s own reading rules, shown here so the badge never has to be taken on faith.
| Margin | Reading | What it usually means |
|---|---|---|
| Below 0% | Loss-making operation | Vacancy plus expenses exceed the rent collected, before any mortgage payment. |
| 0% to under 20% | Thin | One repair or a longer vacancy can erase a year of profit. Reserves are not optional at this level. |
| 20% to under 40% | Workable | A real surplus, but the largest expense line decides how safe it feels month to month. |
| 40% and above | Strong | At least 40 cents of every collected dollar survives expenses, leaving room for reserves and surprises. |
Watch the edge case the tool handles for you: at 100% vacancy there is no collected rent to divide by, so the margin reports 0.00% rather than an error, while net income shows the real story, the expenses you still owe on an empty property. An empty unit with $50 of monthly costs nets negative $50, and the annual line annualizes that to negative $600. Vacancy is never free; it converts rent into a bill.
The expense lines landlords undercount most
Four lines cause most of the gap between a listing’s implied profit and an owner’s first-year reality. Each one is a separate box in this calculator precisely because lumping them is how they get forgotten.
- Maintenance averaged honestly. Repairs arrive in lumps: nothing for five months, then a water heater. A monthly average built from two or three years of actual invoices beats the tidy 1% guesses in listing brochures. If you have no history, be pessimistic on older buildings; systems age together.
- Management, even when that is you. Entering $0 because you self-manage makes the property look better than an identical managed one, and hides the value of your own hours. Many owners run the numbers both ways: $0 for the cash picture, a market fee for the honest comparison against other investments.
- Vacancy between tenants, not just empty months. Turnover brings cleaning, touch-up paint, listing time and sometimes a placement fee on top of the lost rent. The vacancy percentage covers lost rent; the advertising and other lines are where turnover costs belong.
- Utilities that revert to the owner. Water, sewer and trash often stay in the owner’s name between tenants or by local rule. Check who actually holds each account before accepting a seller’s expense sheet.
The tax side has its own categories, and they do not map one-to-one onto operating lines. The IRS sets out which rental expenses are deductible and how they are reported in Publication 527, Residential Rental Property, with the filing mechanics in the Instructions for Schedule E. Keep two sets of books in your head: this calculator for operating truth, Schedule E for tax truth.
What this calculator deliberately leaves out
Net rental income is an operating measure, so four real-world items sit outside it by design. Knowing the boundary keeps the number honest instead of impressive.
- Income tax. Your bracket, entity structure and deductions decide it. A property netting $13,200 does not promise $13,200 after tax.
- Depreciation. A non-cash deduction that shelters income on the return. The IRS covers the mechanics in Publication 946, How To Depreciate Property. It changes taxable income, never monthly cash.
- Capital expenditures. A roof or furnace replacement is a capital item, not a month of maintenance. Owners who care about it usually hold a separate reserve rather than inflating the maintenance line.
- Principal paydown and appreciation. The mortgage payment line treats the whole payment as cash out, which is right for cash flow, but part of that payment quietly builds equity, and the property may gain value. Both matter for total return; neither is operating income. The gross potential rent calculator covers the top-line side of that wider picture, the maximum rent a property could collect at full occupancy.
What competing calculators miss
Rental income tools tend to fail in one of four directions, and each failure mode showed up in the current search results for this keyword:
- Yield-only tools (LandlordStudio, Shepcom and similar rental yield pages): one annual running-costs box and a gross-versus-net yield. Fast, but a single lumped cost figure cannot tell you whether taxes or maintenance is the problem, and there is no monthly cash-flow line at all.
- Percentage-model tools (Omni Calculator’s cap rate page): expenses and vacancy entered as percentages that get multiplied against gross income. Elegant for a cap rate, wrong shape for an owner holding actual bills: your tax bill is a dollar amount, not a percentage of rent.
- Full underwriting suites (Calculator.net’s rental property calculator, BiggerPockets): twenty-year projections, IRR, sale proceeds and repair budgets. Powerful for a purchase decision, heavy for the simple monthly question most owners ask, and the headline outputs bury the plain net figure this page leads with.
- NOI snapshots (LoomLease): a clean annual NOI with an expense ratio, close in spirit to this page, but annual-first and without the cash-flow margin or the optional mortgage line that turns an asset figure into a pocket figure.
- The gap this page fills: monthly-first, eight itemised expense lines plus vacancy as the ninth breakdown line, net income and its margin up front, then cash flow and cap rate only when you supply the inputs they need. Nothing is annualised behind your back and no expense hides inside a percentage.
Frequently asked questions
Net rental income is the rent a property keeps after vacancy and operating expenses: gross rent, minus the vacancy loss, minus taxes, insurance, maintenance, management, utilities you pay, advertising, HOA fees and other operating costs. It is the property's operating profit, before mortgage payments and before income tax, so it measures the asset itself rather than your loan.
Use your own trailing twelve months if you own the property: months vacant divided by months available, as a percentage of rent. If you are screening a purchase, 5% is a common planning allowance and 8 to 10% is safer in softer markets or older buildings. The Census Bureau's Housing Vacancies and Homeownership survey publishes current rental vacancy rates by region, which is a better starting point than a national rule of thumb.
Not in net rental income. Net rental income measures the property, so it stops before financing, the same way net operating income does. The mortgage payment counts one line down, in cash flow after mortgage, which measures your pocket. That is why this calculator shows both: a property can post healthy net income and still lose cash every month if the loan is large relative to the rent.
There is no single good cap rate, because the rate prices risk and expected growth in a specific market. Residential rentals in many US markets trade roughly between 4% and 8%: lower rates usually mean a safer area or stronger expected appreciation, higher rates usually mean more risk, older stock or weaker demand. Compare a property's cap rate with recent sales of similar properties on the same streets, not with a national average, and use the dedicated cap rate calculator when the rate itself is the question.
No. Depreciation is a non-cash tax deduction: it lowers taxable rental income on Schedule E without taking a dollar out of your bank account, and income tax depends on your personal situation, so both sit outside this operating calculation. The IRS explains the rental income and expense rules, including depreciation, in Publication 527. Run this calculator for the operating picture, then hand the result to your tax records for the after-tax picture.
Because the mortgage payment is bigger than the operating surplus. Example: net rental income of $1,100 a month against a $1,300 mortgage payment leaves cash flow of negative $200, even though the property itself earns money. The usual fixes are a larger down payment, a lower rate, a longer term, or a cheaper property. The property is not the problem in that scenario; the financing is.
Divide each annual figure by 12 and enter the monthly result. Property tax bills, insurance premiums and HOA dues are usually quoted annually or semi-annually, while this calculator works in months so every line lines up with the monthly rent. Keep the same treatment for every line: mixing one annual figure into monthly boxes is the most common way this calculation goes wrong.
The margin is the share of collected rent left after operating expenses. Above 40% is strong and leaves room for reserves. Between 20% and 40% is workable but exposed to one big repair. Under 20% is thin: a single vacant month or a new roof can wipe out a year of profit. Below zero, the property loses money before the mortgage is even considered. The badge under the results applies exactly these bands to your numbers.
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References
- Internal Revenue Service. Publication 527: Residential Rental Property (Including Rental of Vacation Homes). Accessed October 22, 2026.
- Internal Revenue Service. Topic No. 414: Rental Income and Expenses. Accessed October 22, 2026.
- Internal Revenue Service. Instructions for Schedule E (Form 1040): Supplemental Income and Loss. Accessed October 22, 2026.
- Internal Revenue Service. Publication 946: How To Depreciate Property. Accessed October 22, 2026.
- Internal Revenue Service. Topic No. 503: Deductible Taxes. Accessed October 22, 2026.
- U.S. Census Bureau. Housing Vacancies and Homeownership. Accessed October 22, 2026.
- U.S. Census Bureau. American Housing Survey. Accessed October 22, 2026.
- Federal Housing Finance Agency. House Price Index Datasets. Accessed October 22, 2026.
- Fannie Mae. Selling Guide B3-3.8-01: General Rental Income Information. Accessed October 22, 2026.
- Consumer Financial Protection Bureau. Ask CFPB: What is a mortgage?. Accessed October 22, 2026.