1. What is Net Rental Income?

Net Rental Income is the actual profit from a rental property after subtracting all deductible expenses from the gross rental income. It represents the true cash flow from the property.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Rental Income — Total gross rent collected per month
• Expenses — All deductible expenses associated with the property per month

Explanation: This calculation shows the actual profit from your rental property after accounting for operating costs.

3. Importance of Calculating Net Income

Details: Knowing your net rental income is crucial for assessing property profitability, tax reporting, and making informed investment decisions.

4. Using the Calculator

Tips: Enter your total monthly rental income and all deductible monthly expenses. Common expenses include mortgage interest, property taxes, insurance, maintenance, and property management fees.

5. Frequently Asked Questions (FAQ)

Q1: What expenses are deductible for rental properties?
A: Common deductible expenses include mortgage interest, property taxes, insurance, repairs, maintenance, utilities, property management fees, and depreciation.

Q2: How does net income differ from cash flow?
A: Net income is before debt service (mortgage principal payments), while cash flow is after all expenses including principal payments.

Q3: Should I include vacancy periods?
A: For accurate long-term calculations, you should account for average vacancy rates by either reducing annual income or including vacancy as an expense.

Q4: What's a good net income percentage?
A: Typically, 35-65% of gross income is considered good net income, depending on property type and location.

Q5: How often should I calculate net income?
A: It's recommended to calculate monthly for cash flow management and annually for tax purposes.