What is being compared
Rental income is not the advertised monthly rent multiplied by twelve. Months without a tenant, repairs, insurance, property tax, management, and turnover consume part of the cash received. This tool starts with an occupancy-adjusted annual rent figure and subtracts only the operating expenses listed. It calls the result income after expenses rather than profit because loan interest, principal, depreciation, income tax, and capital improvements are not implied by these fields.
Formula and timing
Collected rent equals monthly advertised rent × 12 × occupancy ÷ 100. The vacancy and turnover reserve equals collected rent × reserve percentage ÷ 100. Annual income after expenses equals collected rent minus maintenance, property tax, insurance, management, and that reserve. Keeping the reserve separate avoids the common error of counting it both as lower occupancy and again as an expense without deciding what risk it is meant to cover.
Worked example with the displayed units
With $2,200 advertised rent and 92% occupancy, annual collected rent is $24,288. A 5% reserve is $1,214.40. Add $1,800 maintenance, $3,200 tax, $1,400 insurance, and $1,800 management: listed annual expenses become $9,414.40 and the modeled income after expenses is $14,873.60. A different occupancy estimate changes the base for the percentage reserve as well as the rent, which is why the formula uses collected rather than advertised rent.
When to use this result
Use the result to compare a proposed rent with a realistic operating budget, or to test how one vacant month affects cash flow. Use figures from invoices, a property manager, local tax notices, and a repair history where possible. Run a lower-occupancy case before relying on a single average. This form is most useful when each property is modeled separately; combining several units can hide which one is funding a shortfall.
Costs and conditions outside the fields
Mortgage payments, purchase price, closing costs, renovations, utilities paid by the owner, association dues, leasing commissions, depreciation, income tax, legal costs, and sale proceeds are outside the calculation. Major roof or HVAC replacement is not the same as routine maintenance and may need its own reserve. Local rules can limit rent increases or impose registration costs, none of which can be inferred from a monthly rent field.
Mistakes that change the answer
Occupancy is a percentage such as 92, not 0.92. Do not use a yearly rent in the monthly rent field. Decide whether management already includes leasing or maintenance before adding it again. A vacancy reserve should reflect the risk not already represented by the occupancy assumption. A positive result does not prove that debt service or tax will be covered.
Scope of this page
This page is an operating-income worksheet for a rental property. It differs from a mortgage calculator because it does not amortize a loan, and from a property-value estimator because it does not predict sale price. Inputs remain in the browser; use actual records and professional advice for decisions with tax or legal consequences.
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