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2-4 Unit Multifamily Cash Flow & NOI Calculator

Underwrite a duplex, triplex, or fourplex the way lenders and appraisers do: unit-by-unit rents flow through vacancy, operating expenses, and reserves to produce NOI, cap rate, cash-on-cash return, and monthly free cash flow.

Income & Expenses

Net Operating Income

$39,300

per year

Monthly Cash Flow

$1,125

after debt service

Cap Rate

8.73%

Cash-on-Cash Return

11.74%

Annual Income Allocation Waterfall

Operating Expenses: $27,252 (41%)
Debt Service: $25,800 (39%)
Net Free Cash Flow: $13,500 (20%)

Income (Annual)

Gross Scheduled Income (GSI)$70,800
Vacancy loss (6%)− $4,248
Effective Gross Income (EGI)$66,552

Operating Expenses (Annual)

Property taxes$5,200
Insurance$2,400
Utilities$3,000
Maintenance (8% GSI)$5,664
CapEx reserve (8% GSI)$5,664
Management (8% EGI)$5,324
Total OpEx$27,252

Returns & Coverage

Net Operating Income$39,300
Annual Debt Service− $25,800
Annual Free Cash Flow (pre-tax)$13,500
Cap Rate (NOI ÷ Price)8.73%
Cash-on-Cash Return11.74%
Operating Expense Ratio40.9% of EGI

Rule-of-thumb check: a healthy small multifamily deal runs a 35-50% expense ratio and a cash-on-cash return of 8-12% with typical leverage.

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Formulas reviewed by Toheeb Ekundayo · September 12, 2026

How this calculator works

The tool follows the standard institutional underwriting waterfall. Each step feeds the next, and every input is editable so you can stress-test a deal in seconds.

Step 1: Gross Scheduled Income (GSI)

GSI is total annual rent if every unit were occupied 100% of the time, plus other income like laundry, parking, or storage. Enter each unit’s rent separately; sellers’ pro formas often blend rents to hide a below-market lease.

Step 2: Effective Gross Income (EGI)

EGI = GSI − vacancy and credit loss. Small residential properties typically run 5-10% vacancy. Using 6% is a realistic default; using 0% is how beginners fool themselves.

Step 3: Operating expenses

  • Fixed costs: property taxes (verify with the county; many jurisdictions reassess after a sale) and landlord insurance.
  • Utilities: water, sewer, trash, and common-area electric. If tenants pay their own utilities, this line shrinks dramatically.
  • Maintenance reserve: modeled as a percentage of GSI (8% is a common default for older buildings).
  • CapEx reserve: the roof-and-boiler fund. This is the line sellers omit and buyers regret. Pre-1980 buildings often need 8-12% of GSI.
  • Property management: computed on EGI (8-10% is market rate) even if you self-manage.

Step 4: Net Operating Income (NOI)

NOI = EGI − Total Operating Expenses

NOI deliberately excludes the mortgage. It measures the property’s income-producing ability independent of financing, which is why it drives both valuation and DSCR lending.

Step 5: Returns

  • Cap rate= NOI ÷ purchase price. The property’s unlevered yield; use it to compare deals and estimate value (Value = NOI ÷ market cap rate).
  • Cash-on-cash return = (NOI − annual debt service) ÷ total cash invested. What your actual dollars earn after financing.
  • Monthly free cash flow = (NOI − debt service) ÷ 12. The number that hits your bank account.

Worked example

A $450,000 duplex with rents of $1,600 and $1,500 plus $100 a month of laundry income produces $38,400 of GSI. At 6% vacancy, EGI is $36,096. Expenses of $5,200 taxes, $2,400 insurance, $3,000 utilities, 8% maintenance ($3,072), 8% CapEx ($3,072), and 8% management ($2,888) total $19,632. NOI is $16,464, a 3.7% cap rate at the asking price. With $2,150 a month of debt service, annual cash flow is −$9,336: this deal fails at list price and needs either a price cut or a rent story. That is exactly the kind of verdict this calculator delivers in ten seconds.

Assumptions and limitations

  • Reserves are percentage-based. For an older building, a component-level reserve study is more accurate; see how to budget CapEx for pre-1980 duplexes.
  • Debt service is entered as a single monthly figure so you can model any loan. Build it with the mortgage calculator first if you do not have a quote.
  • Results are pre-tax. Depreciation and Schedule E deductions can turn positive cash flow into a paper loss; the Schedule E guide covers that math.

Frequently asked questions

How do you calculate Net Operating Income (NOI) on a duplex?
NOI equals Effective Gross Income (gross scheduled rent plus other income, minus vacancy and credit loss) minus operating expenses: taxes, insurance, utilities, repairs, CapEx reserves, and property management. Mortgage payments are excluded, which is what makes NOI comparable across deals.
Should I include the mortgage in operating expenses?
No. Debt service is a financing cost, not an operating cost. Keeping it out of NOI is what makes cap rates comparable across properties and what DSCR lenders underwrite against. The calculator subtracts debt service separately to produce cash flow.
What vacancy rate should I use?
Use 5-8% for stable working-class neighborhoods, 8-12% for high-turnover areas, and never 0%. Even the best buildings lose a month here and there between tenants.
What is a good cap rate for a small multifamily property?
In most Midwest and Southeast markets, 6-8% is common for 2-4 unit buildings; coastal metros often trade at 4-5%. A cap rate below your mortgage interest rate means leverage will reduce your cash flow, so the deal must be justified by appreciation, amortization, or rent growth.
What is a good cash-on-cash return on a duplex?
With typical leverage, 8-12% pre-tax is a healthy target. Below 4-5%, you are buying appreciation and loan paydown rather than income, which can still be rational, but only as a conscious choice.
Why include a management fee if I self-manage?
Your labor has a cost, lenders underwrite a management line whether or not you pay one, and a future buyer will. Modeling 8-10% of EGI keeps the NOI honest and the property's value comparable to others.

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