Monthly and annual cash flow, NOI, cap rate, and cash-on-cash return — with vacancy, maintenance, and CapEx allowances included by default rather than quietly left out.
Cap rate uses NOI before debt service, so it does not change with your financing. Cash-on-cash does.
For planning only — not investment, tax, or legal advice. Results are only as good as the assumptions you enter.
The arithmetic is simple, so when projections turn out wrong it is almost never the maths. It is the three lines that are easy to omit because they do not appear on a bank statement every month: vacancy, maintenance, and capital reserves.
Rent minus mortgage minus taxes minus insurance looks healthy on almost any property. Add a month of vacancy a year, eight percent of rent for repairs, and a reserve for the roof you will eventually replace, and a fair number of deals move from comfortable to marginal.
That is not an argument against buying. It is an argument for knowing which one you are buying before you own it.
Vacancy, maintenance, and CapEx are the three lines people leave out to make a deal look good. Leaving them out does not make them go away; it just moves the surprise later.
It ignores your mortgage on purpose, which is what makes it useful for comparing two properties. Cash-on-cash describes your particular deal, financing and all.
Portfolio averages hide the one property quietly losing money. Per-property numbers are the only ones that tell you what to sell.
A projection is a hypothesis. Twelve months of actual per-property P&L tells you whether your assumptions were right, which is the part most landlords never close the loop on.
Related: cap rate explained, rental property metrics, and per-property accounting.
Rentwelly gives you a per-property P&L from a real ledger, so you can check the projection against what actually happened.
Start with gross rent plus any other income, subtract an allowance for vacancy to get effective income, subtract operating expenses to get net operating income, then subtract debt service. What remains is cash flow. The step people skip is the allowance for vacancy, maintenance, and capital reserves, which is exactly why their real returns disappoint them.
There is no universal number, because it depends on leverage, local appreciation, and what else you could do with the money. What matters more is whether the assumptions behind it are honest. A 12 percent return calculated with no maintenance or vacancy allowance is not a 12 percent return.
Cap rate is NOI divided by price, ignoring financing entirely, so it describes the property. Cash-on-cash is annual cash flow divided by cash invested, so it describes your deal. Two investors buying the identical building at the same price will share a cap rate and can have very different cash-on-cash returns.
Commonly cited planning figures are around 5 to 10 percent of rent for maintenance and a further 5 to 10 percent set aside for capital items like roofs and systems. Older properties need more. These are reserves, not predictions — in most months you spend nothing, and then a furnace fails.
No. This is a cash calculation, not a tax calculation. Depreciation reduces taxable income without affecting cash, which is why a property can show a tax loss while putting money in your pocket. Talk to your accountant about the tax picture.
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