The 1% rule is a screening tool, not a verdict
If monthly rent is ≥ 1% of purchase price, the deal usually cashflows in a 7% rate environment. Coastal markets almost never hit 1%; Midwest cashflow markets often clear 1.2%+. Use it to triage listings, then underwrite the survivors in detail.
Don't forget the silent expenses
Real-world rental P&Ls die from vacancy, turnover (paint/clean/list/2 weeks empty), capex (HVAC, roof, water heater), and bad tenants. The 12% maintenance + capex default is a stabilized number — push to 18–22% for any property over 40 years old.
- • Vacancy: model 5% baseline, 8–10% in soft markets.
- • Turnover: ~$1,500–3,000 per turn (paint, clean, listing fee, lost rent).
- • Capex: budget $150–300/door/month for major systems.
Self-management vs property management
Pro management runs 8–10% of rent plus leasing fees. Self-managing keeps that money but costs hours and screening expertise. For out-of-state rentals, pro management is almost always the right call — your time is worth more than 8% of $1,800.
Cashflow is what separates a real rental investment from a leveraged bet on appreciation. The honest cashflow number isn't 'rent minus mortgage' — it's rent minus mortgage minus tax, insurance, vacancy, repairs, capex reserves, and management. This calculator runs the full P&L the way an institutional landlord would, so you know whether the property actually pays you each month or quietly bleeds while you wait for the market to bail you out.
What each input means
Get these inputs right and the output is reliable. Get them wrong and the calculator just multiplies bad assumptions.
Monthly rent
Achievable market rent, validated against recent comparable leases (not Zillow estimates).
Typical range: Set by submarket. Pull from RentCast or actual rented comps within 0.5 miles.
Mortgage payment (P&I)
Monthly principal + interest on the loan. Excludes escrowed tax and insurance.
Typical range: Use the amortization on actual rate, term, and loan balance.
Property tax (annual)
Assessed tax bill. Will reassess on purchase in some states (CA Prop 13 doesn't apply to new buyers in those states).
Typical range: 0.5–2.5% of property value annually depending on state. TX, IL, NJ are high; HI, AL, CO are low.
Insurance (annual)
Landlord-specific policy (dwelling fire + liability), more expensive than owner-occupied.
Typical range: $800–$2,500/yr SFR; $400–$1,200 per unit in small multi. Add flood/wind if coastal.
Vacancy %
Share of months unoccupied including turnover days.
Typical range: 5–8% A-class; 8–12% B/C; 15%+ in declining submarkets.
Maintenance + capex %
Combined recurring repairs + reserves for long-life systems (roof, HVAC, flooring).
Typical range: 8–15% of rent. Older properties higher. New construction can run 3–5% the first 5 years.
Property management %
Charge it even if self-managing — your time has market value.
Typical range: 8–10% of collected rent + 50–100% of one month's rent on each new lease-up.
Worked examples
Real scenarios with the math walked through line by line.
Cashflow-positive Midwest SFR
Scenario: $1,750/mo rent, $980 P&I, $2,400/yr tax, $1,200/yr insurance, 7% vacancy, 10% maint+capex, 8% management.
Math: Gross annual rent = $21,000. Vacancy = $1,470. EGI = $19,530. Tax + insurance = $3,600. Maint + capex = $1,953. Management = $1,562. NOI = $12,415. Debt = $11,760. Annual cashflow = $655 (~$55/mo).
Outcome: Technically positive but thin. One $4k repair wipes out 6 years of cashflow. Real return relies on appreciation + principal paydown — model both before calling this a 'cashflow deal'.
Sunbelt SFR with negative cashflow
Scenario: $2,500/mo rent, $1,850 P&I, $4,800/yr tax, $1,800/yr insurance, 5% vacancy, 8% maint+capex, 9% self-managed credit.
Math: Gross = $30,000. Vacancy = $1,500. EGI = $28,500. Tax+ins = $6,600. Maint+capex = $2,280. Mgmt = $2,565. NOI = $17,055. Debt = $22,200. Annual cashflow = −$5,145 (−$429/mo).
Outcome: Negative cashflow rental. Defensible only if you forecast 4%+ annual rent growth and 5%+ appreciation. At today's prices most metro SFR underwrites this way — be explicit that you're speculating on appreciation, not collecting income.
Common mistakes
Where this calculation usually goes wrong in the real world.
- Reporting 'rent minus mortgage' as cashflow. That number ignores 30–50% of true ownership cost.
- Skipping property management cost when self-managing. You're consuming the market rate (8–10%); count it explicitly so the deal is portable to a passive owner.
- Forgetting turnover cost. Lease-up commissions, paint, cleaning, and 2–4 weeks of vacancy between tenants typically cost 1 month of rent per turn.
- Modeling insurance and tax flat across the hold. Both grow 3–8% annually in most states; capex reserves should scale with rent.
- No reserves. A 6-month operating expense reserve per property is the minimum to survive a tenant nonpayment or major repair without selling at a loss.
When to use this calculator
- Before submitting an offer — calculate the cashflow at your proposed purchase price.
- When evaluating a rent increase — model the impact on monthly cashflow.
- Comparing 2–4 candidate deals on the same line-item basis.
- Annual portfolio review — re-run at current rent, current rates, current tax bill.
- Stress-testing — what happens at 10% vacancy and +25% expenses?
Glossary
Gross rent multiplier (GRM)
Price ÷ annual gross rent. Quick comparison metric; 10–14 is typical for SFR rentals in the US.
Effective gross income (EGI)
Gross scheduled rent minus vacancy and collection loss.
Reserve fund
Cash set aside for major repairs and capex. Industry standard: 5–10% of rent per month, accumulated separately from operating cashflow.
Turnover
The process and cost of replacing a tenant. Typically 1x monthly rent in lost rent + repairs + leasing commission.
1031 exchange
Tax-deferred swap of one investment property for another. Major lever for compounding wealth without tax drag, but strict 45/180-day timelines.
More questions answered
What monthly cashflow per door should I target?
Common rules of thumb: $200/mo per door for SFR in cashflow markets, $100/mo per unit for small multifamily, breakeven-only for appreciation plays in growth markets. Below $100/door, any single repair erases a year of return. Above $400/door is unusual and often signals a property with hidden problems (deferred maintenance, declining area, mispriced rent).
Should I pay cash to maximize cashflow?
Mathematically usually no. A $250k cash purchase generating $1,800/mo gross might net $12k/yr cashflow — a 4.8% return on $250k. The same $250k as five 25% down payments could produce $30–40k of combined cashflow + much higher leveraged total return. But cash gives you sleep-at-night safety and flexibility to refi later. Decision depends on portfolio stage and risk appetite, not pure IRR.
How do I know my expense assumptions are realistic?
Compare your numbers against the BiggerPockets / Roofstock benchmark: total operating expenses (excluding mortgage) average 35–50% of gross rent across the country. If your underwriting shows 25% expenses, you've forgotten something — usually capex reserves and management. Newer landlords almost always under-model expenses by 5–15 percentage points.
Methodology last reviewed: 2026-05 by the RevenueLab editorial team.
FAQ
What's a good monthly cashflow per door?
$100–$200 per door after all expenses is a healthy floor for buy-and-hold investors. $300+ is excellent but rare in 2026's rate environment unless you bought right or refinanced cheap.
Does this calculator include appreciation?
No — this is a pure cashflow tool. Use the residential property ROI calculator for cap rate, cash-on-cash, and 5-year appreciation modeling.
Why 5% vacancy by default?
Across stabilized US single-family rentals, 5–8% annualized vacancy is realistic when you blend turnover days, listing days, and bad-debt write-offs. Class A new builds run 3–5%, Class C urban can run 10%+.
What if I pay cash?
Set down payment to 100% and the loan goes away — net cashflow jumps but cash-on-cash drops (you have more money tied up). Cash deals make sense for capital preservation, not yield maximization.
Does it work for small multifamily?
Yes — set 'rent' to the total combined rent of all units. Push the maintenance % to 14–18% to reflect higher per-door wear in 2–4 unit buildings.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.