Rental Income Calculator
Estimate what a rental property might net each month once vacancy, management, insurance, property tax, and long-term repairs are counted. Default values are illustrative, so replace them with figures for your property.
How the Estimate Is Calculated
Gross rent is reduced first by the vacancy allowance you enter. The management fee is then calculated on collected rent rather than scheduled rent, which is a common way fees are charged.
Property tax is entered annually. A rental does not carry a homestead exemption or the assessment cap that comes with it, so owners converting a former residence may see a higher tax bill. Insurance is also entered annually, and landlord policies are priced differently from owner-occupied policies.
Maintenance and the capital set-aside are separate lines. Maintenance covers ordinary small repairs. The capital set-aside covers larger replacements such as the roof, air handler, and water heater, which wear out over time whether or not money has been saved for them.
Net operating income is what remains before the mortgage. It shows how the property performs separate from how it is financed. Cap rate compares that figure with property value.
What is left out: income tax, depreciation, principal paydown, leasing fees on a new tenancy, and any planned renovation.
Understanding the Estimate
Why is my insurance estimate so much higher than my old homeowner policy?
A landlord or dwelling fire policy is priced differently from an owner-occupied policy, and rates can vary with roof age and location. Get a quote for the property as a rental rather than adjusting your current premium, since this line can change the result significantly.
Do I need a capital set-aside if nothing is broken?
Major components wear out gradually, so setting money aside before they fail spreads the cost over time. The percentage in this calculator is a rough rule of thumb, and the maintenance reserve calculator offers a more detailed estimate.
Where does the management fee default come from?
The default is an illustrative figure. Management and leasing fees vary by company and agreement, so enter the fee from a proposal you have received. Set the fee to zero to see a self-managed picture, then use the self-manage or hire calculator to compare your own time.
What is the expense ratio?
The expense ratio is operating expenses, excluding the mortgage, as a share of collected rent. It varies by property. If the ratio looks unusually low, check whether a cost such as insurance, reserves, or HOA fees has been left out.
Questions About This Estimate?
If you own a rental and would like to talk through these figures or our residential management service, contact Ambriel.