Rental Property Cash Flow & ROI Calculator
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Investment Analysis
Net Operating Income (NOI)
$0
Understanding Rental Property Cash Flow & ROI
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To succeed, you need to understand the numbers. This Rental Property Cash Flow Calculator helps you analyze potential deals to ensure they meet your financial goals.
Why Use This Tool? Avoid bad investments by calculating your "Cash on Cash Return" before you sign any papers. A property might look good on the surface but could have negative cash flow once you factor in vacancies, repairs, and financing costs.
Key Metrics Explained
1. Cash Flow
Cash flow is the profit you bring in each month after all expenses are paid. This includes your mortgage, taxes, insurance, and money set aside for repairs.
Formula: Total Income – Total Expenses = Cash Flow
2. Cash on Cash Return (ROI)
This is arguably the most important metric for rental investors. It measures the annual return on the actual cash you invested (down payment + closing costs + rehab), rather than the total price of the property.
- 8-12%: Generally considered a good return for beginners.
- 15%+: Excellent return, often found in riskier markets or value-add deals.
3. Cap Rate (Capitalization Rate)
The Cap Rate measures the property's natural rate of return if it were bought in all cash. It helps you compare the profitability of different properties regardless of how they are financed.
How to Estimate Expenses Properly
New investors often underestimate expenses. Here are the realistic inputs you should use:
- Vacancy Rate: Use 5-8% (about 2-4 weeks vacant per year).
- Maintenance & CapEx: Set aside 10-15% of rent for repairs and big-ticket items like roof or HVAC replacement.
- Property Management: If you hire a manager, add 8-10% to your expenses (not included in the basic calculation above unless added to expenses manually).
Use this calculator to adjust your offer price. If the ROI isn't high enough at the asking price, lower your offer until the numbers make sense.
function calculateROI() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPaymentPercent = parseFloat(document.getElementById('downPaymentPercent').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var rehabCosts = parseFloat(document.getElementById('rehabCosts').value) || 0;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var propertyTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var insurance = parseFloat(document.getElementById('insurance').value) || 0;
var hoa = parseFloat(document.getElementById('hoa').value) || 0;
var maintenancePercent = parseFloat(document.getElementById('maintenance').value) || 0;
// 2. Calculate Initial Investment (Cash Needed)
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var totalCashInvested = downPaymentAmount + closingCosts + rehabCosts;
// 3. Calculate Mortgage Payment (Principal & Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyMortgage = 0;
if (loanTerm > 0 && interestRate > 0) {
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanTerm > 0 && interestRate === 0) {
monthlyMortgage = loanAmount / (loanTerm * 12);
}
// 4. Calculate Operating Expenses & Income
var vacancyCost = monthlyRent * (vacancyRate / 100);
var maintenanceCost = monthlyRent * (maintenancePercent / 100);
var effectiveGrossIncome = monthlyRent – vacancyCost;
var totalOperatingExpenses = propertyTax + insurance + hoa + maintenanceCost;
// Net Operating Income (NOI) = Income – Operating Expenses (excluding mortgage)
var monthlyNOI = effectiveGrossIncome – totalOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// 5. Calculate Cash Flow
var totalMonthlyExpensesIncludingMortgage = totalOperatingExpenses + monthlyMortgage;
var monthlyCashFlow = effectiveGrossIncome – totalMonthlyExpensesIncludingMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// 6. Calculate Metrics
var cashOnCashReturn = 0;
if (totalCashInvested > 0) {
cashOnCashReturn = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// 7. Update DOM Results
// Helper for currency formatting
function formatCurrency(num) {
return new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(num);
}
document.getElementById('monthlyCashFlow').innerText = formatCurrency(monthlyCashFlow);
document.getElementById('totalExpenses').innerText = formatCurrency(totalMonthlyExpensesIncludingMortgage);
document.getElementById('noiYearly').innerText = formatCurrency(annualNOI) + " / yr";
document.getElementById('totalCashNeeded').innerText = formatCurrency(totalCashInvested);
document.getElementById('cashOnCash').innerText = cashOnCashReturn.toFixed(2) + "%";
document.getElementById('capRate').innerText = capRate.toFixed(2) + "%";
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var cfElement = document.getElementById('monthlyCashFlow');
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} else {
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}
// Show results
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}