🏠 Rental Property Investment Calculator

Whether you're a real estate investor, rental property owner, or real estate agent helping clients evaluate investment opportunities, this comprehensive rental property investment calculator will help you analyze potential returns and make data-driven decisions.

1%, 10%, & 50% rules in real estate investing

These are quick screening rules that investors use to rapidly evaluate whether a rental property is worth deeper analysis:

The 1% Rule Monthly rent should equal at least 1% of the purchase price.

  • Example: $200,000 property should rent for at least $2,000/month

  • This is a quick filter for cash flow potential

  • In markets like Asheville, this rule is often hard to meet (you might only hit 0.5-0.7%), so many investors adjust expectations in appreciation-focused markets

  • If a property doesn't come close, it probably won't cash flow well

The 50% Rule Operating expenses (everything except mortgage) will eat up about 50% of your gross rental income.

  • Example: $2,000/month rent means ~$1,000 goes to expenses (taxes, insurance, vacancy, R&M, CapEx, property management, HOA, utilities if you pay them)

  • The remaining 50% goes toward your mortgage payment (and hopefully leaves some cash flow)

  • This is surprisingly accurate across many properties once you account for everything

  • Useful for quick napkin math: if half the rent won't cover the mortgage, the deal probably doesn't work

The 10% Rule (less common) This usually refers to putting aside 10% of gross rent for maintenance and repairs specifically, though some use it as a target for total monthly cash flow after all expenses.

Example using all three:

  • $300,000 property at $2,500/month rent

  • 1% rule: $2,500/$300,000 = 0.83% (doesn't meet the rule, but might work in an appreciating market)

  • 50% rule: $1,250 to expenses, $1,250 available for mortgage

  • With a $240,000 loan at 7.5% over 30 years: payment is ~$1,678

  • This property would have negative cash flow of $428/month

These are screening tools, not gospel. They help you quickly eliminate bad deals before spending time on detailed analysis

What percentage should be added for Repairs & Maintenance, Capital Expenditures, and Vacancy?

For underwriting rental properties, here are the standard percentages that most investors and lenders use as conservative estimates:

Vacancy: 5-10% of gross rental income

  • 5% if you're in a strong rental market with consistent demand (like many parts of Asheville)

  • 8-10% is more conservative and accounts for turnover between tenants, marketing time, and potential economic downturns

  • Even if you plan to keep it constantly rented, budget for this

Repairs & Maintenance (R&M): 5-10% of gross rental income

  • This covers ongoing repairs like plumbing issues, appliance fixes, HVAC servicing, landscaping, etc.

  • Older properties or those with deferred maintenance should be closer to 10%

  • Newer properties might get away with 5%, but 8% is a good middle ground

Capital Expenditures (CapEx): 5-10% of gross rental income

  • This is for major replacements: roof, HVAC system, water heater, appliances, flooring, etc.

  • These don't happen every year, but you're setting aside reserves for when they do

  • Older properties need higher reserves (8-10%)

  • Factor in the age and condition of major systems

Conservative approach: Use 10% for each category (30% total). This might seem high, but it protects you from negative cash flow surprises and helps ensure the property actually performs well long-term.

Example on a $2,000/month rental:

  • Vacancy: $200/month (10%)

  • R&M: $200/month (10%)

  • CapEx: $200/month (10%)

  • Total set aside: $600/month or $7,200/year

Don't forget to also budget for property management (8-10% if you're hiring out), property taxes, insurance, and HOA fees if applicable.