Rental Income Calculator

Net rental income per year —

Net income per month: —
Gross scheduled rent: —
Vacancy loss: —
Rent collected: —
Operating expenses: —
Expenses as share of collected rent: —

Where a year of scheduled rent goes

The chart appears with your result

Net rental income is the rent you actually collect minus the costs of running the property. A unit let at $1,500 a month schedules $18,000 a year; a 5% vacancy allowance cuts that to $17,100, and $6,000 of tax, insurance and repairs leaves $11,100, about $925 a month, before any financing or income tax.

About this tool

Landlords sizing up a purchase, owners deciding whether to self-manage, and accidental landlords filling in a first budget all need the same figure: what a rental leaves behind once the running costs are paid. Enter the monthly rent, the number of units and a vacancy allowance, then the yearly property tax, insurance, repairs, any utilities or HOA dues, and a management fee as a share of collected rent. The result is net yearly and monthly income, the rent lost to vacancy, total operating expenses and the expense ratio, with a donut chart of how the scheduled rent splits. Every line of the working is listed. The figure stops before financing and income tax: it ignores depreciation, which affects your tax bill but not your cash.

How to use it

Set the rent and units
Type the monthly rent for one unit and use the − and + buttons to set how many identical units you let.
Allow for vacancy
Drag the vacancy slider to the share of the year you expect units to sit empty or rent to go unpaid; 5% is roughly two and a half weeks.
Add yearly costs
Enter property tax, landlord insurance, repairs and any utilities or HOA dues you pay, all as yearly amounts.
Add a manager if you use one
Set the management fee slider; it is charged on rent collected, not on scheduled rent.

Examples

One unit at $1,500 a month

Monthly rent per unit: 1500
Rented units: 1
Vacancy allowance: 5
Property tax: 3000
Landlord insurance: 1200
Repairs and maintenance: 1800
Management fee: 0
Utilities, HOA and other: 0

Result Net rental income per year: $11,100.00
Net income per month: $925.00
Gross scheduled rent: $18,000.00
Vacancy loss: $900.00
Rent collected: $17,100.00
Operating expenses: $6,000.00
Expenses as share of collected rent: 35.1%

Gross scheduled rent = $1,500.00 x 12 x 1 = $18,000.00
Vacancy loss = $18,000.00 x 5% = $900.00
Effective income = $18,000.00 – $900.00 = $17,100.00
Management fee = $17,100.00 x 0% = $0.00
Expenses = $3,000.00 + $1,200.00 + $1,800.00 + $0.00 + $0.00 = $6,000.00
Net income = $17,100.00 – $6,000.00 = $11,100.00

Twelve months of rent is $18,000; allowing 5% for vacancy and paying $6,000 in tax, insurance and repairs leaves $11,100 a year.

Duplex at $1,200 per side, 8% manager

Monthly rent per unit: 1200
Rented units: 2
Vacancy allowance: 5
Property tax: 2500
Landlord insurance: 1000
Repairs and maintenance: 2000
Management fee: 8
Utilities, HOA and other: 0

Result Net rental income per year: $19,671.20
Net income per month: $1,639.27
Gross scheduled rent: $28,800.00
Vacancy loss: $1,440.00
Rent collected: $27,360.00
Operating expenses: $7,688.80
Expenses as share of collected rent: 28.1%

Gross scheduled rent = $1,200.00 x 12 x 2 = $28,800.00
Vacancy loss = $28,800.00 x 5% = $1,440.00
Effective income = $28,800.00 – $1,440.00 = $27,360.00
Management fee = $27,360.00 x 8% = $2,188.80
Expenses = $2,500.00 + $1,000.00 + $2,000.00 + $0.00 + $2,188.80 = $7,688.80
Net income = $27,360.00 – $7,688.80 = $19,671.20

The manager takes 8% of the $27,360 actually collected, $2,188.80, which with the other costs leaves $19,671.20 a year.

How it is calculated

Net = R × 12 × U × (1 − v) × (1 − m) − (T + I + M + O)

R: monthly rent per unit
U: number of units
v: vacancy allowance as a fraction
m: management fee as a fraction of collected rent
T, I, M, O: yearly property tax, insurance, maintenance and other costs

Gross scheduled rent assumes every unit is let all year. The vacancy allowance turns that into rent collected, and the management fee is taken from collected rent because managers are paid on what comes in. Fixed yearly costs are then subtracted. The result matches what real-estate analysts call net operating income: it excludes financing, capital improvements and depreciation, which the IRS treats separately in Publication 527.

Sources

Publication 527, Residential Rental Property — Internal Revenue Service
Topic no. 414, Rental income and expenses — Internal Revenue Service

When not to use it

Short-term holiday lets with nightly pricing need occupancy-based figures instead of a monthly rent.
It does not estimate the income tax due on rental profit.
Units with very different rents should be run one at a time and added together.

Common mistakes

Leaving vacancy at zero, which assumes no empty weeks between tenants for years on end.
Entering monthly tax or insurance figures in the yearly boxes.
Counting a new roof as maintenance; it is a capital improvement and belongs outside yearly running costs.

Frequently asked questions

What vacancy rate is reasonable for a rental?

Many landlords budget 5 to 8 percent, which is roughly three to four weeks a year of lost rent. A unit in a tight market with long tenancies may justify less; student housing or a high-turnover area often needs 10 percent or more. Use your own turnover history if you have one.

Why is the management fee charged on collected rent?

Most property managers take a percentage of rent they actually collect, typically 8 to 12 percent for long-term residential lets, so an empty month costs them too. Applying the fee after vacancy mirrors that. Leasing or placement fees charged per new tenant are separate and can go in the other-costs box.

Is net rental income the same as profit?

Not quite. This figure is income after operating costs, often called net operating income. Profit for tax purposes also subtracts depreciation and deductible financing costs, and cash flow also subtracts money set aside for big replacements.

What does the expense ratio tell me?

It is operating expenses divided by collected rent. Single-family rentals often run 35 to 45 percent, and anything above 60 percent means costs are eating most of the rent. The tool warns when the ratio passes 60 percent.

Should repairs include major replacements?

Keep routine fixes in the repairs box: plumbing call-outs, paint between tenants, appliance servicing. Roofs, furnaces and kitchen refits are capital improvements under IRS rules and are depreciated over years rather than expensed, so many owners budget a separate reserve for them.

Can I use it for a multi-unit building?

Yes, if the units rent for about the same amount: set the unit count with the stepper and enter building-wide yearly costs. For a mix of studios and three-bedroom flats, enter the average monthly rent per unit or run each type separately.