About
Post-Sitzer settlement (2024), commissions are negotiable. Historic 6% split has dropped to 4-5% in many markets. Sellers can now refuse to pay buyer agent. FSBO (no agent) saves but limits exposure.
Formula
Frequently asked questions
How accurate is the Real Estate Commission?
It applies the standard formula. Accuracy is limited only by your input precision. For decisions with material consequences (taxes, medical, legal, structural), use the result as a starting point and verify with a qualified professional in the relevant field.
Is the Real Estate Commission free to use?
Yes. 100% free, no signup, no payment, no API key. The site is funded by display ads around the tool but not inside the calculation flow.
Are my inputs saved anywhere?
No. All inputs stay in your browser tab. Closing the tab discards them. The site uses Google Analytics for traffic measurement (anonymized) but the analytics never see what you type into the form.
Can I use the Real Estate Commission on my phone?
Yes. The tool is responsive and tested on iOS Safari, Android Chrome, and major desktop browsers. Touch targets meet Apple's 44pt and Google's 48dp minimum.
Does the Real Estate Commission work offline?
Yes. Once the page has loaded, it works without internet. The calculation runs in JavaScript on your device.
How do I report a bug or suggest improvement to the Real Estate Commission?
Email hi@3tej.com with the URL of this page and a description of what you saw vs expected. We typically respond within 72 hours.
Can I share results from the Real Estate Commission?
Take a screenshot or copy the output. The page doesn't generate shareable URLs for specific calculations - inputs stay in your browser only.
Why are the results different from another real estate commission tool?
Most likely: different formula assumptions, different default values, different rounding rules, or different applicable rates. Check the methodology if both tools document it. Both can be valid for different scenarios.
Is rental property a good investment in 2026?
Depends entirely on location and price. Markets where the 1% rule works (Midwest US, parts of Southeast) still produce strong cashflow. Coastal markets (CA, NY, Toronto, Sydney) typically require 30-50% down to break even on cashflow; you're betting on appreciation.
What's the minimum I need to start?
20% down on a conventional loan in the US, plus reserves (6 months of mortgage typically). For a $250K property: $50K down + $10-15K closing + $10K reserves = $75K minimum to start. House-hacking (FHA loan, owner-occupy then rent rooms) can drop the down payment to 3.5%.
Should I self-manage or hire a property manager?
Self-manage if you have time, are within 1 hour of the property, and don't mind tenant calls. PM fees are 8-12% of gross rent plus 50-100% of first month for new leases. PMs add value above ~5 properties when self-management becomes a part-time job.
How do I calculate ROI on a rental?
Cash-on-cash return is the most useful: annual cashflow after all expenses (including mortgage) divided by total cash invested (down payment + closing + immediate repairs). Compare to alternative investments. Target 8%+ for a stabilized property.
Is short-term rental (Airbnb) more profitable than long-term?
Gross revenue is usually 2-3x higher. Net is closer to 1.2-1.5x because cleaning, supplies, dynamic pricing tools, and higher vacancy eat into the difference. STR also requires more active management and is increasingly regulated/banned in major cities.
Real estate return metrics
| Metric | Formula | What it measures |
|---|---|---|
| Cap rate | NOI / property value | Unlevered annual yield. 6-8% typical. |
| Cash-on-cash return | Annual cashflow / cash invested | Return on YOUR money after the mortgage. 8-15% targeted. |
| GRM (Gross Rent Multiplier) | Price / annual rent | Quick price comparison. Lower = better deal. |
| DSCR (Debt Service Coverage Ratio) | NOI / annual debt service | Lender criterion. 1.20+ usually required. |
| IRR (Internal Rate of Return) | Annualized return over hold period | Total return inc. appreciation + cashflow + tax. |
| 1% rule | Monthly rent >= 1% of purchase price | Quick screen. Hard to find post-2020. |
The real costs of a rental property
Beginner landlords often quote "rent minus mortgage" as cashflow. That misses 30-50% of true costs. Full operating expenses for a $300K property:
| Cost | Annual estimate | Notes |
|---|---|---|
| Property tax | $3,000-$9,000 | 0.5-3% of value depending on state |
| Insurance (landlord) | $1,200-$2,400 | 30% higher than owner-occupied |
| Maintenance | $3,000 | 1% of value rule; older properties more |
| Capital expenses (capex) | $1,500-$3,000 | Roof, HVAC, water heater - amortize |
| Vacancy | $1,000-$2,000 | 5-8% of gross rent typical |
| Property management | $2,400 | 8-10% of monthly rent if outsourced |
| Legal / accounting | $500 | Eviction reserve + tax prep |
| Total operating expenses | $12,600 - $24,300 | 42%-81% of $30K gross annual rent |
Why the 50% rule exists
Rule of thumb: assume 50% of gross rent goes to operating expenses (NOT mortgage). For a $2,500/month rental, expect $15,000/year in expenses, leaving $15,000 NOI before debt service. Beginners who skip this end up with negative cashflow.
Tax treatment
- Depreciation: US allows residential rental to be depreciated over 27.5 years. On a $300K property (excluding land), that's ~$10,900/year of paper expense - often makes rental income tax-free on paper.
- Mortgage interest: deductible against rental income.
- Operating expenses: deductible.
- Capital gains on sale: long-term rate (0/15/20% US) PLUS depreciation recapture at 25%.
- 1031 exchange: defer all gains by reinvesting in another property. US-only.