Interactive Simulator
Rental Property Investment Simulator
Stress-test a buy-and-hold rental before you wire earnest money. Year-by-year cash flow, headline metrics, and a clear-eyed comparison against parking the same capital in an index fund.
This is a deterministic projection — one path under your assumptions. The sensitivity grid shows how robust the verdict is to the assumptions you’re least certain about.
Property & financing
The deal terms. Down payment and closing costs sum to your upfront capital at risk.
Rental income
What the unit charges and how often it's actually paid.
Operating expenses
The 'iceberg under the rent' — what eats NOI before the mortgage.
Growth assumptions
How rents, expenses, and value evolve over the hold.
Hold period & exit
When and how the deal ends.
Comparison
What else this capital could be doing.
Trails an index fund by $26K over 10 years
Cash flow stays negative for the full 10 years (peak $49K out of pocket); net wealth never catches an index fund within the 10-year hold. After 10 years you’d still trail an index fund by $26K.
Year-1 cap rate
3.8%
Cash-on-cash
-8.0%
DSCR
0.63
-$550/mo (negative)
10-yr IRR
4.2%
-2.8pp vs. 7.0% index fund
Trails an index fund by $26K over 10 years
Cash flow stays negative for the full 10 years (peak $49K out of pocket); net wealth never catches an index fund within the 10-year hold. After 10 years you’d still trail an index fund by $26K.
Year-1 cap rate
3.8%
Cash-on-cash
-8.0%
DSCR
0.63
-$550/mo (negative)
10-yr IRR
4.2%
-2.8pp vs. 7.0% index fund
The deal at a glance
Cash to close
$83K
$75K down
Mortgage P&I
$1,497/mo
$17,963/yr debt service
Year-1 NOI
$11K
from $25K effective rent
Equity multiple
1.65×
$54K pre-tax profit
Net wealth: rental vs. index fund
Wealth if you sold today — equity + banked cash flow, less your initial cash. Mostly paper wealth, not cash in hand.
Operating cash flow, year by year
Real cash, in and out. Negative bars = you fed the property; the line tracks what you’ve actually banked.
Where does your profit come from?
Total profit, decomposed. Tax effects are shown separately below.
Net profit (rental, pre-tax)
+$54,012
Index-fund alternative
+$79,790
IRR sensitivity grid
Your current scenario is outlined. Hover any cell for detail.
| Rent growth %/yr | ||||||
|---|---|---|---|---|---|---|
| 0% | 1% | 2% | 3% | 4% | 5% | |
| 5% | ||||||
| 4% | ||||||
| 3% | ||||||
| 2% | ||||||
| 1% | ||||||
| 0% | ||||||
Outlined cell = your current assumptions.
Depreciation tax shield (illustrative)
Straight-line over 27.5 years on the building basis (80% of cost), recaptured at sale.
Annual depreciation
$8,945
on $246K basis
Annual tax shield
~$2,147
at 24% marginal
Recapture at sale
-$21,469
on $89K taken
Net lifetime tax benefit
+$0
shield − recapture
What’s driving this
At year 1 the property doesn't cover its loan: NOI of $11K versus $18K of debt service (DSCR 0.63). You'd need to cover the gap from savings each month. Most of your projected upside comes from appreciation (≈120% of upside) and principal paydown (≈37% of upside). Over 10 years your projected IRR is 4.2%, versus 7.0% for the same capital in an index fund — the index wins by $26K.
Assumptions & methodology
- Operating expenses (property tax, maintenance, CapEx) scale with the current property value each month. Insurance, HOA, and “other” grow at the expense-growth rate.
- Mortgage uses standard 30-yr amortization at a fixed rate. No refinance, no PMI is modeled (assuming >20% down).
- Net operating income (NOI) excludes financing. Cap rate is year-1 NOI ÷ purchase price. DSCR is year-1 NOI ÷ annual debt service.
- IRR is computed pre-tax on the cash-flow series:
−cash invested, then yearly cash flow, with net sale proceeds added to the final year. - Exit value compounds purchase price at 3%/yr for 10 years. Selling costs of 6% of sale price are deducted before computing net proceeds.
- Depreciation and recapture figures are illustrative — they assume full ability to use the shield each year (no passive- loss limits applied) and recapture taxed at min(marginal rate, 25%). Pre-tax IRR is the headline number.
- The sensitivity grid re-runs the full simulation across rent- growth × appreciation pairs, holding all other inputs fixed.
This simulator is for educational purposes only and does not constitute investment, tax, or legal advice. Outcomes depend on real market conditions, your specific tax situation, and operating realities not fully captured here. Consult a qualified CPA and your local market knowledge before committing capital.