Prorated rent
Prorated rent estimates a partial period. Check whether the method states whether it uses actual days in the month, a 30-day month or another lease-defined convention.
Rental property return
Rental analysis should separate gross rent, operating expenses, net operating income, financing costs and cash flow. Combining them too early hides what is actually driving the result.
Cap rate and cash-on-cash return
Cap rate compares net operating income with property value before financing. Cash-on-cash return compares annual cash flow with cash invested. They answer different questions and are not interchangeable.
Rent vs buy
Rent-vs-buy calculations require assumptions for mortgage rate, maintenance, taxes, insurance, rent growth, home appreciation, transaction costs and investment return on cash not used for a down payment.
Rental analysis examples
Net operating income is rental income minus operating expenses before financing. If annual rent is 24,000 and operating expenses are 7,200, NOI is 16,800. On a 280,000 purchase price, the cap rate is 6.0% because 16,800 / 280,000 = 0.06.
Cash-on-cash return includes financing. If annual pre-tax cash flow after debt service is 4,500 and cash invested is 75,000, cash-on-cash return is 6.0%. A useful rental result separates property performance from financing structure so users can see what changed.
Useful calculators
- Prorated Rent Calculator
- Rental Property Calculator
- Cap Rate Calculator
- Rent vs Buy Calculator
- Real Estate and Rental Formulas
FAQ
Is cap rate the same as return?
No. Cap rate excludes financing and compares NOI with property value.
Why does prorated rent differ by lease?
Leases may specify actual-day, 30-day or other conventions.
What is the biggest rent-vs-buy assumption?
Usually time horizon, home appreciation, rent growth and the opportunity cost of the down payment.
Last reviewed: 2026-05-16.