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. Successful investors rely on accurate math to determine if a specific asset will generate positive cash flow or become a financial burden. This Rental Property Cash Flow Calculator is designed to help you analyze the potential return on investment (ROI) for residential properties.
Key Metrics Explained
1. Monthly Cash Flow
This is your profit after all expenses are paid. The formula is simple: Total Income – Total Expenses = Cash Flow. In our calculator, we deduct the mortgage payment, property taxes, insurance, maintenance, HOA fees, and vacancy costs from your monthly rental income. A positive cash flow means the property pays for itself and provides income; negative cash flow means you are losing money every month.
2. Cash on Cash Return (CoC)
Cash on Cash Return measures the annual return you make on the actual cash you invested (your down payment and closing costs). It is calculated as:
For example, if you invest $50,000 as a down payment and the property generates $3,000 in net cash flow per year, your CoC return is 6%. Many investors aim for a CoC return of 8-12% or higher.
3. Cap Rate (Capitalization Rate)
Cap Rate measures the profitability of a property assuming you paid for it efficiently in cash (no loan). It allows you to compare different properties regardless of financing.
Formula: (Net Operating Income / Purchase Price) × 100
Net Operating Income (NOI) is your annual revenue minus operating expenses, excluding mortgage payments. A higher Cap Rate generally indicates a higher potential return, though it may come with higher risk.
Estimating Expenses Accurately
One of the biggest mistakes new landlords make is underestimating expenses. When using this calculator, ensure you account for:
Vacancy: Properties don't stay rented 365 days a year. Budgeting 5-8% of rent for vacancy covers the time between tenants.
Maintenance: Even new homes need repairs. Setting aside 5-10% of the rent ensures you have funds for leaky faucets, HVAC repairs, or painting.
Capital Expenditures (CapEx): Major expenses like a new roof or water heater happen infrequently but are costly.
Use the inputs above to run different scenarios. For example, see how a higher interest rate affects your cash flow, or how increasing the down payment changes your Cash on Cash return.
function calculateRentalROI() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value);
var annualTax = parseFloat(document.getElementById('propertyTax').value);
var annualIns = parseFloat(document.getElementById('homeInsurance').value);
var monthlyMaint = parseFloat(document.getElementById('maintenance').value);
var monthlyHOA = parseFloat(document.getElementById('hoaFees').value);
// Validation
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(years) || isNaN(rent)) {
alert("Please enter valid numbers for all fields.");
return;
}
// 1. Calculate Mortgage Payment
var loanAmount = price – down;
var monthlyRate = rate / 100 / 12;
var totalPayments = years * 12;
var monthlyPrincipalInterest = 0;
if (rate === 0) {
monthlyPrincipalInterest = loanAmount / totalPayments;
} else {
monthlyPrincipalInterest = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
}
// 2. Calculate Operating Expenses
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var vacancyCost = rent * (vacancyPct / 100);
var totalMonthlyExpenses = monthlyPrincipalInterest + monthlyTax + monthlyIns + monthlyMaint + monthlyHOA + vacancyCost;
var operatingExpensesOnly = monthlyTax + monthlyIns + monthlyMaint + monthlyHOA + vacancyCost; // Excluding mortgage for Cap Rate
// 3. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 4. Calculate NOI (Net Operating Income) for Cap Rate
// NOI = Annual Rent – Annual Operating Expenses (Excluding Debt Service)
var annualNOI = (rent * 12) – (operatingExpensesOnly * 12);
// 5. Calculate Metrics
var capRate = (annualNOI / price) * 100;
// CoC Return = Annual Cash Flow / Total Cash Invested (Down Payment)
// Note: For simplicity, we are assuming Closing Costs are included in down payment or negligible in this basic Calc,
// but typically one would add closing costs to the denominator.
var cocReturn = 0;
if (down > 0) {
cocReturn = (annualCashFlow / down) * 100;
}
// 6. Display Results
var resultDiv = document.getElementById('result');
resultDiv.style.display = 'block';
// Helper for currency formatting
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('resMortgage').innerText = fmt.format(monthlyPrincipalInterest);
document.getElementById('resExpenses').innerText = fmt.format(totalMonthlyExpenses);
var cfEl = document.getElementById('resCashFlow');
cfEl.innerText = fmt.format(monthlyCashFlow);
cfEl.className = monthlyCashFlow >= 0 ? 'result-value positive-cf' : 'result-value negative-cf';
var acfEl = document.getElementById('resAnnualCashFlow');
acfEl.innerText = fmt.format(annualCashFlow);
acfEl.className = annualCashFlow >= 0 ? 'result-value positive-cf' : 'result-value negative-cf';
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
}