Analyze the potential profitability of a real estate investment.
Property & Loan Info
Income & Expenses
Financial Results Summary
Monthly Principal & Interest:$0.00
Total Monthly Operating Expenses (Tax, Ins, Maint, Vacancy):$0.00
Monthly Net Operating Income (NOI):$0.00
Estimated Monthly Cash Flow
$0.00
Annual Cash Flow
$0.00
Cash-on-Cash ROI
0.00%
function calculateRentalCashFlow() {
// 1. Retrieve and parse inputs using var
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRateAnnual = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var annualTax = parseFloat(document.getElementById("annualTax").value);
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var maintenanceRate = parseFloat(document.getElementById("maintenanceRate").value);
// 2. Validate essential inputs to prevent NaN errors
if (isNaN(purchasePrice) || purchasePrice <= 0 || isNaN(monthlyRent) || monthlyRent 0) {
if (interestRateAnnual === 0) {
monthlyMortgage = loanAmount / (loanTermYears * 12);
} else {
var monthlyRate = (interestRateAnnual / 100) / 12;
var totalPayments = loanTermYears * 12;
// Standard Amortization Formula
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
}
}
// 4. Calculate Operating Expenses and Income
// Vacancy loss is money you never collected
var monthlyVacancyLoss = monthlyRent * (vacancyRate / 100);
var effectiveGrossIncome = monthlyRent – monthlyVacancyLoss;
// Operating expenses
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
// Maintenance reserve is usually a percentage of Gross Rent
var monthlyMaintenanceReserve = monthlyRent * (maintenanceRate / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyMaintenanceReserve;
// Net Operating Income (NOI) = Effective Gross Income – Operating Expenses
var monthlyNOI = effectiveGrossIncome – totalOperatingExpenses;
// 5. Calculate Final Cash Flow
// Cash Flow = NOI – Debt Service
var monthlyCashFlow = monthlyNOI – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// 6. Calculate Cash-on-Cash ROI
var cashOnCashROI = 0;
// We use down payment as the initial investment here.
// Note: A full analysis would include closing costs and rehab costs in the denominator.
if (downPayment > 0) {
cashOnCashROI = (annualCashFlow / downPayment) * 100;
} else if (purchasePrice > 0 && downPayment === 0) {
// If 100% financed (rare), ROI is theoretically infinite if cashflow is positive,
// but let's just show 0 or handle it gracefully.
cashOnCashROI = 0;
}
// 7. Update the display
document.getElementById("resultMortgage").innerText = "$" + monthlyMortgage.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
// Display total expenses including vacancy loss for clarity in the summary view
var totalDisplayedExpenses = totalOperatingExpenses + monthlyVacancyLoss;
document.getElementById("resultOperatingExpenses").innerText = "$" + totalDisplayedExpenses.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
document.getElementById("resultNOI").innerText = "$" + monthlyNOI.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
var cashFlowElement = document.getElementById("resultMonthlyCashFlow");
cashFlowElement.innerText = "$" + monthlyCashFlow.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
// Change color based on positive or negative flow
cashFlowElement.style.color = monthlyCashFlow >= 0 ? "#28a745" : "#dc3545";
document.getElementById("resultAnnualCashFlow").innerText = "$" + annualCashFlow.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
document.getElementById("resultCoCROI").innerText = cashOnCashROI.toFixed(2) + "%";
// Show the results container
document.getElementById("calculationResults").style.display = "block";
}
Understanding Rental Property Cash Flow
When investing in real estate, "cash flow" is the net amount of cash that moves into or out of an investment property each month. It is arguably the most critical metric for buy-and-hold investors. Positive cash flow means the property is generating more income than it costs to own and operate, putting money into your pocket every month. Negative cash flow means you must contribute money monthly to keep the property running.
How This Calculator Works
This tool takes a comprehensive look at the income and expenses associated with a rental property to determine its viability. Here is a breakdown of the key components in the calculation:
Gross Monthly Rent: The total amount you charge tenants before any deductions.
Vacancy Rate: No property stays occupied 100% of the time. A standard estimate is 5-8% to account for turnover periods where you collect zero rent.
Operating Expenses: These are the recurring costs necessary to run the property, excluding the mortgage. They include property taxes, insurance, and reserves for maintenance.
Maintenance Reserves: Even if you don't spend money on repairs every month, you should set aside a percentage of the rent (typically 5-15% depending on property age) for inevitable repairs and capital expenditures (like a new roof or HVAC).
Net Operating Income (NOI): This is your Gross Rent minus Vacancy losses and Operating Expenses. It represents the property's profitability before financing costs.
Debt Service (Mortgage): Your monthly principal and interest payment.
The final formula used is: Cash Flow = Net Operating Income (NOI) – Monthly Mortgage Payment.
Example Scenario
Imagine you purchase a property for $300,000 with a $60,000 down payment (20%). You secure a 30-year loan at 6.5% interest. You rent the property for $2,500 per month.
Assuming annual taxes of $3,500, insurance of $1,200, a 5% vacancy rate, and an 8% maintenance reserve:
Your monthly Mortgage Payment would be approximately $1,517.
Your total estimated monthly Operating Expenses (including vacancy loss and reserves) would total roughly $717.
Your resulting estimated Monthly Cash Flow would be approximately $266.
This positive cash flow results in an annual return of over $3,000 on your initial $60,000 down payment, yielding a Cash-on-Cash ROI of roughly 5.3%.