Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, you must accurately calculate your Cash Flow—the net amount of money moving in or out of the investment every month.
How to Use This Calculator
This calculator breaks down the financial performance of a potential rental property into four key metrics:
Monthly Cash Flow: The actual profit in your pocket each month after all expenses and mortgage payments are made.
Cash on Cash Return (CoC): A percentage that measures the return on the actual cash you invested (Down Payment), helping you compare real estate against stocks or other investments.
Net Operating Income (NOI): The profitability of the property excluding debt service (mortgage). This is useful for analyzing the asset's raw potential.
Cap Rate: NOI divided by the purchase price. This helps compare the profitability of different properties regardless of how they are financed.
The 50% Rule and the 1% Rule
Real estate investors often use "rules of thumb" to filter properties quickly before running a full analysis:
The 1% Rule: Suggests that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month.
The 50% Rule: Estimates that 50% of your gross rental income will go toward operating expenses (excluding the mortgage). If a property rents for $2,000, expect $1,000 in expenses.
While these rules are helpful for screening, they are not precise. Our calculator above uses your specific numbers for taxes, insurance, repairs, and management fees to give you a true picture of the investment.
Why Cash Flow Matters More Than Appreciation
Many beginners bank on "Appreciation"—the hope that the property value will go up over time. However, appreciation is speculative. Cash Flow is factual. A property with positive cash flow pays for itself and provides income even if the housing market stays flat. Always prioritize positive cash flow to ensure your investment is sustainable.
function calculateCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var rentalIncome = parseFloat(document.getElementById('rentalIncome').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var taxYearly = parseFloat(document.getElementById('propertyTax').value);
var insuranceYearly = parseFloat(document.getElementById('insurance').value);
var maintRate = parseFloat(document.getElementById('maintenance').value);
var capexRate = parseFloat(document.getElementById('capex').value);
var mgmtRate = parseFloat(document.getElementById('managementFee').value);
var hoaMonthly = parseFloat(document.getElementById('hoa').value);
// Validation to prevent NaN errors
if (isNaN(price) || isNaN(downPayment) || isNaN(rentalIncome)) {
alert("Please enter valid numbers for Price, Down Payment, and Rent.");
return;
}
// 2. Calculations
// Loan Amount
var loanAmount = price – downPayment;
// Monthly Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var mortgagePayment = 0;
if (loanAmount > 0 && interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
}
// Vacancy Loss
var vacancyLoss = rentalIncome * (vacancyRate / 100);
// Effective Gross Income
var effectiveIncome = rentalIncome – vacancyLoss;
// Operating Expenses Breakdown
var taxMonthly = taxYearly / 12;
var insuranceMonthly = insuranceYearly / 12;
var maintAmount = rentalIncome * (maintRate / 100);
var capexAmount = rentalIncome * (capexRate / 100);
var mgmtAmount = rentalIncome * (mgmtRate / 100);
var totalOperatingExpenses = taxMonthly + insuranceMonthly + maintAmount + capexAmount + mgmtAmount + hoaMonthly;
// Net Operating Income (NOI)
var monthlyNOI = effectiveIncome – totalOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// Total Expenses (Operating + Debt Service)
var totalExpenses = totalOperatingExpenses + mortgagePayment;
// Cash Flow
var monthlyCashFlow = effectiveIncome – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Returns
// Cap Rate = Annual NOI / Purchase Price
var capRate = (annualNOI / price) * 100;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested
// Assuming Total Cash Invested = Down Payment for simplicity (could include closing costs)
var cocReturn = 0;
if (downPayment > 0) {
cocReturn = (annualCashFlow / downPayment) * 100;
}
// 3. Update UI
// Helper for currency formatting
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('resGrossIncome').innerText = fmt.format(rentalIncome);
document.getElementById('resVacancyRate').innerText = vacancyRate;
document.getElementById('resVacancyLoss').innerText = "-" + fmt.format(vacancyLoss);
document.getElementById('resEffectiveIncome').innerText = fmt.format(effectiveIncome);
document.getElementById('resMortgage').innerText = "-" + fmt.format(mortgagePayment);
document.getElementById('resTax').innerText = "-" + fmt.format(taxMonthly);
document.getElementById('resInsurance').innerText = "-" + fmt.format(insuranceMonthly);
document.getElementById('resMaintenance').innerText = "-" + fmt.format(maintAmount + capexAmount);
document.getElementById('resManagement').innerText = "-" + fmt.format(mgmtAmount);
document.getElementById('resHOA').innerText = "-" + fmt.format(hoaMonthly);
document.getElementById('resTotalExpenses').innerText = "-" + fmt.format(totalExpenses);
var cashFlowEl = document.getElementById('resMonthlyCashFlow');
cashFlowEl.innerText = fmt.format(monthlyCashFlow);
// Style changes for positive/negative cash flow
if (monthlyCashFlow >= 0) {
cashFlowEl.style.color = "#27ae60";
} else {
cashFlowEl.style.color = "#c0392b";
}
document.getElementById('resAnnualCashFlow').innerText = fmt.format(annualCashFlow);
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
// Show results
document.getElementById('resultsArea').style.display = "block";
}