Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. The difference between a savvy investment and a money pit lies in the numbers. This Rental Property Cash Flow Calculator is designed to give you a comprehensive financial overview of a potential investment property.
Why Cash Flow is King
Cash flow is the profit you bring in each month after all expenses, including the mortgage, taxes, insurance, and maintenance, have been paid. Positive cash flow means the property pays for itself and puts money in your pocket. Negative cash flow means you are subsidizing the property from your other income, which increases risk.
Understanding the Key Metrics
Net Operating Income (NOI): This represents the annual income generated by the property minus all operating expenses. It notably excludes the mortgage principal and interest payments. NOI is a raw measure of the property's ability to generate revenue.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price, this percentage helps you compare the return of the property regardless of how you paid for it (cash vs. finance). A higher Cap Rate generally indicates a better return, though often with higher risk.
Cash on Cash Return (CoC): This is perhaps the most important metric for leveraged investors. It measures the annual cash flow relative to the total cash invested (Down Payment + Closing Costs). It answers the question: "What is the return on the actual dollars I put into this deal?"
Estimating Variable Expenses
Many new investors fail because they underestimate variable costs. Even if a property is occupied and in good condition today, you must account for:
Vacancy: Properties won't be rented 365 days a year. A 5-8% vacancy rate (about 2-4 weeks a year) is a prudent standard estimate.
Maintenance & CapEx: Toilets break and roofs need replacing. Setting aside 10-15% of the rent every month ensures you have the funds when repairs are needed.
Property Management: Even if you plan to self-manage, factoring in an 8-10% management fee ensures the deal still works if you later decide to hire a professional.
How to Use This Calculator
Start by entering the purchase price and your financing details. Be honest about your variable expenses; it is better to be conservative in your estimates than to be surprised by unexpected costs later. Adjust the rent and expenses to see how slight changes impact your bottom line and Cash on Cash Return.
function calculateCashFlow() {
// Get Inputs
var price = parseFloat(document.getElementById('rpc_price').value);
var downPercent = parseFloat(document.getElementById('rpc_down_percent').value);
var interest = parseFloat(document.getElementById('rpc_interest').value);
var years = parseFloat(document.getElementById('rpc_term').value);
var rent = parseFloat(document.getElementById('rpc_rent').value);
var taxYear = parseFloat(document.getElementById('rpc_tax').value);
var insYear = parseFloat(document.getElementById('rpc_insurance').value);
var hoa = parseFloat(document.getElementById('rpc_hoa').value);
var vacancyRate = parseFloat(document.getElementById('rpc_vacancy').value);
var repairRate = parseFloat(document.getElementById('rpc_repairs').value);
var mgmtRate = parseFloat(document.getElementById('rpc_management').value);
// Validation
if (isNaN(price) || isNaN(rent) || isNaN(interest) || isNaN(years)) {
alert("Please enter valid numbers for Price, Rent, Interest, and Term.");
return;
}
// Calculations
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var monthlyRate = (interest / 100) / 12;
var numPayments = years * 12;
// Mortgage P&I
var mortgage = 0;
if (interest === 0) {
mortgage = loanAmount / numPayments;
} else {
mortgage = (loanAmount * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -numPayments));
}
// Monthly Fixed Expenses
var taxMonth = taxYear / 12;
var insMonth = insYear / 12;
// Monthly Variable Expenses (based on Rent)
var vacancyCost = rent * (vacancyRate / 100);
var repairCost = rent * (repairRate / 100);
var mgmtCost = rent * (mgmtRate / 100);
var totalOperatingExpenses = taxMonth + insMonth + hoa + vacancyCost + repairCost + mgmtCost;
var totalExpenses = totalOperatingExpenses + mortgage;
// Metrics
var cashFlow = rent – totalExpenses;
var annualCashFlow = cashFlow * 12;
var annualNOI = (rent * 12) – (totalOperatingExpenses * 12);
// Investment Basis (Assuming 3% closing costs estimated for robust CoC calc, or just downpayment)
// For simplicity in this tool, we use Down Payment as total cash invested
var totalCashInvested = downPayment;
var coc = 0;
if (totalCashInvested > 0) {
coc = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = (annualNOI / price) * 100;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// Display Results
document.getElementById('res_mortgage').innerText = formatter.format(mortgage);
document.getElementById('res_expenses').innerText = formatter.format(totalExpenses);
document.getElementById('res_noi').innerText = formatter.format(annualNOI / 12); // Monthly NOI
var cfElement = document.getElementById('res_cashflow');
cfElement.innerText = formatter.format(cashFlow);
// Styling negative cash flow
if (cashFlow < 0) {
cfElement.classList.remove('rpc-highlight');
cfElement.classList.add('rpc-highlight-neg');
} else {
cfElement.classList.remove('rpc-highlight-neg');
cfElement.classList.add('rpc-highlight');
}
document.getElementById('res_coc').innerText = coc.toFixed(2) + '%';
document.getElementById('res_cap').innerText = capRate.toFixed(2) + '%';
// Show Results container
document.getElementById('rpc_results').style.display = 'block';
}