Beaconshire Advisory · www.beaconshireadvisory.com · Rental Property ROI, Cash-on-Cash & DSCR Calculator · printed
Calculator · Capital & Investment
Does this rental actually pencil — before tax, after tax, and at the exit?
Most rental calculators stop at cash flow. This one runs the whole underwriting: vacancy and reserves, management, debt service and DSCR, the quick-screen rules, then the tax layer — depreciation from the IRS tables, mortgage interest and the $25,000 passive-loss allowance — and a year-by-year hold with appreciation, paydown and the sale.
Year-one pro forma
From gross rent to after-tax cash flow.
Quick screens
The rules of thumb investors use to triage a listing — useful for sorting, not for deciding.
Cash flow by year
Rent and expenses grow at the rates you set; the mortgage payment does not.
Value, loan balance and equity
Equity builds from appreciation and principal paydown.
Hold-period projection
Download the CSV for the full table.
What this means
What a lender, and a tax advisor, would say about this deal.
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How it works
Methodology & assumptions
- Income. Gross potential rent + other income, less vacancy & credit loss = effective gross income (EGI). Management is applied to EGI; maintenance and capex reserves to gross rent.
- NOI = EGI − operating expenses (taxes, insurance, HOA, reserves, management, utilities, other). Cap rate = NOI ÷ price. Cash flow = NOI − annual debt service. Cash-on-cash = cash flow ÷ (down payment + closing + rehab). DSCR = NOI ÷ debt service. Break-even occupancy = (operating expenses + debt service) ÷ gross potential income.
- Screens. 1% rule: monthly rent ÷ price. 50% rule: operating expenses + vacancy as a share of gross rent. Gross rent multiplier: price ÷ annual rent. These are triage heuristics from investor practice, not underwriting standards.
- Depreciation. Basis = (price + closing) × (1 − land %) + make-ready, recovered straight-line over 27.5 years with the mid-month convention. First-year percentage comes from IRS Publication 946, Table A-6, for the month placed in service (January 3.485% … December 0.152%). Years 2+ use 3.636%.
- Taxable income = NOI − mortgage interest − depreciation (reserves are treated as expensed for simplicity; actual capex is capitalized). A loss is deductible against other income up to the $25,000 special allowance if you actively participate, reduced by 50% of MAGI above $100,000 and gone at $150,000 (IRC §469(i); Pub 925). The remainder is suspended and carried forward.
- Projection. Rent, expenses and value grow at your rates; the loan amortizes; sale proceeds = value × (1 − selling costs) − loan balance. IRR is computed on initial cash out, annual pre-tax cash flows, and net sale proceeds. Equity multiple = total cash back ÷ cash invested. Depreciation recapture (25% maximum) and capital-gains tax on sale are shown as an estimate in the insights but not deducted from IRR.
- Not modeled. Cost segregation and bonus depreciation, the qualified business income deduction on rental income, short-term rental rules, real estate professional status, refinancing, and §1031 exchanges.
This calculator is an educational estimate built from published figures and the assumptions listed above. It is not tax, legal, or financial advice, does not account for every provision that may apply to you, and is not a substitute for a return prepared from your actual records. Figures are checked when published and may lag mid-year changes.
Questions
Common questions
What cash-on-cash return is good?
In 2026’s rate environment, leveraged cash-on-cash of 4–8% with positive DSCR above 1.2× is a solid long-term rental; double digits usually means a value-add deal, a cheap market, or an assumption that is too generous. Remember that cash-on-cash ignores paydown, appreciation and tax — the IRR captures all four.
Why does the tax loss matter if the property makes money?
Depreciation lets you deduct a non-cash expense, so a property can produce cash while showing a loss on your return. If you actively participate and your MAGI is under $100,000, up to $25,000 of that loss offsets wages or business income this year. Above $150,000 it is suspended — still valuable, just later — unless you qualify as a real estate professional.
Should I count the capex reserve as an expense?
For underwriting, yes — a roof is coming whether or not you budget for it. For tax, actual improvements are capitalized and depreciated, not expensed. The calculator uses the reserve in both places for simplicity, which slightly overstates the tax loss in years with no actual capex.
How do DSCR loans work?
DSCR investor loans qualify the property, not the borrower’s income: the lender wants gross rent (or NOI, depending on the lender) to cover the payment by a minimum ratio, typically 1.0–1.25×, with 20–25% down. Rates run above conventional owner-occupied mortgages. The calculator’s DSCR uses NOI, the more conservative definition.
What happens at sale?
Gain above your adjusted basis is taxed: the depreciation you took is recaptured at up to 25%, the rest at long-term capital-gain rates (0 / 15 / 20%) plus the 3.8% net investment income tax if your income is above the threshold, plus state tax. A §1031 exchange defers all of it if you buy replacement property under the deadlines. Exit planning for rentals starts a year before you list.
Keep going
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