ARDOtools

Rental Property Analyzer

Estimate what a rental actually returns: annual cash flow after every operating cost and the loan, plus the cap rate and the cash-on-cash return that let you compare it against other options.

Inputs

Result

Not sure what cap rate means? See cap rate, cash flow and cash-on-cash worked on one rental.

Wondering what the debt service coverage figure means, or what lenders want? See DSCR explained for a rental property.

Planning estimate only. Replace assumptions with your real costs, contracts, taxes, and market conditions.

How it works

  1. Enter the purchase and the rent

    The price, your down payment and the rent you can realistically charge — the one a comparable unit on the same street is actually let at, not the one the listing suggests.

  2. Be honest about vacancy and upkeep

    Vacancy is taken off the rent first, and maintenance and management are then percentages of what is left rather than of the full rent. That is the correct order, and it means a high vacancy figure quietly reduces those two costs as well.

  3. Read all three figures

    They answer different questions. Cash flow asks whether it pays you each year, cap rate asks whether the asset is priced well independently of how you financed it, and cash-on-cash asks what the money you actually put in is earning.

Who this is for

Screening a listing

Rule out the obvious no before booking a viewing. Most listings fail on the first pass, and it takes about a minute to find out.

Comparing two properties

Cap rate compares the assets; cash-on-cash compares what your own money earns. A property can win on one and lose on the other, and which matters depends on whether capital or cash flow is your constraint.

Stress-testing

Raise vacancy, raise the loan payments, and see whether it still works. A deal that only survives its best-case inputs is not a deal.

Reviewing what you own

Rents and costs move. A property that worked at purchase may not now, and the cap rate against what you paid is not the same as against what it is worth today.

Questions

What vacancy rate should I assume?
Five to eight percent is a common planning figure for a stable long-let market, but it is local. One month empty a year is roughly 8 percent. Short lets run far higher.
What is the difference between cap rate and cash-on-cash?
Cap rate is net operating income over the purchase price and ignores your mortgage, so it compares properties. Cash-on-cash is annual cash flow over the cash you actually put in, so it compares your money’s options.
Are maintenance and management percentages of the full rent?
No — of the rent you collect after vacancy. That is the standard treatment, since an empty unit generates no management fee, but it does mean the two costs fall when you raise the vacancy assumption. Read the cash flow rather than the individual costs when stress-testing.
Why is my cash flow negative?
Usually because operating costs and debt service together exceed the rent. That is not automatically a bad deal if you are buying for appreciation, but it should be a decision rather than a surprise.
Why does the cap rate ignore my mortgage?
Because it measures the property, not the purchase. Two buyers paying different deposits at different interest rates get the same cap rate and very different cash-on-cash returns, which is exactly why both figures are shown.
Does this include tax or depreciation?
No. It stops at pre-tax cash flow. Tax treatment of rental income varies enough by country and by owner that any figure here would be wrong for most people.
What is the debt service coverage ratio?
Net operating income divided by the annual loan payments. Above 1 the property pays its own loan, and lenders commonly want a cushion over that, often 1.2 or more, though the requirement varies by lender and loan type, and some residential lenders work it out from gross rent rather than net operating income, so check which method yours uses. At the defaults it is about 1.31, shown as debt service coverage in the result.
What is break-even occupancy?
The share of the year the property has to be rented to cover its operating costs and loan payments. Maintenance and management move with the rent actually collected, so they are treated as a share of it. Below this occupancy the property loses cash even if the rent looks fine on paper. At the defaults it is about 78.5 percent.