Real Estate Cap Rate, DSCR & Cash-on-Cash Return Calculator

Analyze investment property profitability: Net Operating Income (NOI), bank DSCR coverage ratio, cash flow, and 5-year equity build-up.

Cap rate, DSCR and cash-on-cash for a financed rental property

The cap rate divides net operating income (NOI) by the total project cost, the DSCR compares that NOI with the loan payments, and cash-on-cash divides the cash flow after debt service by your down payment. With the default inputs the cap rate is 4.65%, but a DSCR of 0.78 means net rents cover only 78% of the loan payments, a shortfall of about €288 a month.

Formulas used

  • Effective income = rent × 12 × (1 − vacancy).
  • Operating expenses = property tax + non-recoverable condo fees + landlord insurance + management and maintenance reserve, as % of effective income.
  • NOI = effective income − operating expenses, before debt and tax.
  • Cap rate = NOI ÷ (price + acquisition costs + renovation).
  • Debt service = (amortizing loan payment + borrower insurance) × 12, with insurance = annual rate × amount borrowed.
  • DSCR = NOI ÷ debt service; cash-on-cash = (NOI − debt service) ÷ down payment; GRM = price ÷ annual gross rent.

Default example

Price €220,000, fees €17,600, renovation €25,000: total cost €262,600. With €45,000 down, the €217,600 loan over 20 years at 3.4% costs €1,250.84 a month plus €54.40 of insurance at 0.3%, or €15,663 a year. Rent of €1,450 with 5% vacancy gives €16,530 of effective income; after €4,324 of expenses, NOI is €12,206. Results: cap rate 4.65%, DSCR 0.78, cash flow −€3,456 a year (−€288 a month), cash-on-cash −7.68%, GRM 12.6 years. Reaching a DSCR of 1.25 with the same loan would take rent of about €2,185 a month.

Assumptions and limits

  • The 1.25 threshold that colors the DSCR is a common lender convention for income property, not a legal rule. In France, banks mainly apply a 35% debt-to-income cap to individuals, which the tool does not calculate.
  • The 5-year principal repaid figure follows the amortization schedule: at 3.4%, the first 60 payments repay about €41,421, less than the €54,400 of a straight-line split (217,600 ÷ 20 × 5), because interest weighs more early in the loan.
  • Insurance on the initial principal, constant vacancy and expenses, no rent growth, no tax, amounts shown in euros.

These ratios are estimates and do not replace a broker's or adviser's analysis.

Sources and dates: 35% debt-to-income cap including insurance and 25-year maximum term, French High Council for Financial Stability decision D-HCSF-2021-7 of 29 September 2021, applicable to loans disbursed since 1 January 2022 (checked 14/10/2026).

Frequently Asked Questions

What is a good DSCR for a rental property?

A DSCR of 1 means net operating income exactly covers the loan payments. Many income-property lenders ask for at least 1.25, a 25% cushion, and the tool uses that threshold as a benchmark. With the default inputs, a DSCR of 0.78 requires topping up about €288 a month.

What is the difference between cap rate and cash-on-cash return?

The cap rate measures the property alone: NOI ÷ total cost, ignoring the loan. Cash-on-cash divides the cash flow left after loan payments by the cash you put in. In the default example the cap rate is 4.65% while cash-on-cash drops to −7.68%, because the loan costs more than the property earns.

Why is the cap rate lower than the advertised yield?

The tool divides NOI by the total cost, including acquisition fees and renovation, and deducts vacancy, management and a maintenance reserve. Measured against the €220,000 purchase price alone, the same €12,206 NOI would give 5.55% instead of 4.65%. Listings often quote a gross yield, rent ÷ price, which looks higher.

How can I reach a DSCR of 1.25?

You need a higher NOI or lower loan payments. In the default example, that means rent of about €2,185 a month instead of €1,450, or borrowing no more than about €135,660, which raises the down payment to roughly €126,940. A longer loan term also lowers the payment.

Is this tool really free?

Yes, all tools on Kristools are 100% free and accessible without registration.

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