See the deal behind the headline return.
These illustrative cases show how financing, reserves and vacancy change cash flow. Open the inputs, change an assumption, compare scenarios and download your free Excel or PDF.
1. A rental with positive NOI can still lose cash
Illustrative inputs: $250,000 purchase, one unit at $2,500/month, 10% vacancy, $2,500 annual taxes, $1,500 insurance, 5% maintenance and 5% capital reserve on collected base rent, and 8% management on scheduled base rent. Financing: 20% down, 9% fixed for 30 years, 2% closing costs. No upfront repairs. Other expenses are $0 in this example; verify their applicability for a real property.
| Calculation | Result |
|---|---|
| Scheduled rent less vacancy | $30,000 − $3,000 = $27,000/year |
| Operating expenses, excluding reserve and debt | $7,750/year |
| NOI before reserve and debt | $19,250/year · 7.70% cap rate |
| Capital reserve | $1,350/year |
| Income after reserve | $17,900/year · 7.16% after-reserve yield |
| Mortgage payment | $1,609.25/month |
| Operating cash flow | −$117.58/month · −$1,410.94/year |
| Cash at purchase | $50,000 down + $5,000 closing = $55,000 |
| Cash-on-cash return | −2.57% |
NOI excludes financing. Cash flow includes loan payments and reserves. Acquisition cash belongs at purchase; it is not deducted a second time from Year 1 operating cash flow.
2. Interest-only payments change timing
On the same $200,000 loan at 9%, interest-only payments are $1,500/month. That makes first-year cash flow −$8.33/month, before any initial vacancy. After a 12-month interest-only period, the remaining balance amortizes over the remaining 29 years. The lower first payment does not make the loan cheaper overall or pay down principal during the interest-only period.
In Financing, set Interest-only period (months) to 12, then save it as a comparison scenario. Open Loan structure, points & initial vacancy to set the maturity. A shorter maturity adds a balloon payment in the year it is due; the model does not assume a lender will refinance it.
3. A delayed first tenant changes the first year
Two months of initial vacancy leave ten operating months. The 10% ongoing vacancy allowance then applies to those ten months: collected income is $30,000 × 10/12 × 90% = $22,500. This avoids charging ongoing vacancy twice during the initial empty period.
With scheduled-rent management fees, annual fees remain $2,400 in this example. With collected-rent fees, they become $1,800. Choose the basis in your actual management contract.
Carry one deal through the workflow
- Enter a property or import your spreadsheet.
- Review source dates and assumptions in Landlord Calculus Insights, then enter property-specific rent and expenses.
- Save up to three comparison scenarios. Save the analysis to your account to carry the comparison set with it.
- Stress-test rent and vacancy, review financing, and compare exit options.
- Download free Excel with an editable model, or a free PDF report.
- Use Portfolio for ongoing properties and Documents when preparing transaction drafts.
Read the data coverage and calculation conventions. Public-data rent benchmarks are historical context; they are not current comparable listings.