1. What is Rental Income?

Net rental income is the amount of money a property generates after subtracting all deductible expenses from the gross rental income. It's a key metric for evaluating the profitability of rental properties.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

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

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

3. Importance of Calculating Net Rental Income

Details: Knowing your net rental income helps with budgeting, tax preparation, and determining the true profitability of your investment property.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What expenses can I deduct?
A: Common deductible expenses include mortgage interest, property taxes, insurance, repairs, maintenance, utilities, management fees, and depreciation.

Q2: Should I include the mortgage principal payment?
A: No, only the interest portion of your mortgage payment is deductible as an expense. Principal payments are not deductible.

Q3: How often should I calculate this?
A: It's good practice to calculate monthly and review annually for tax purposes and financial planning.

Q4: What's a good net rental income?
A: This varies by market, but generally you want positive cash flow after all expenses. Many investors aim for at least 6-8% return on investment.

Q5: Should I include capital improvements?
A: No, capital improvements (like a new roof) must be depreciated over time rather than deducted as immediate expenses.