Cash flow is the lifeblood of any real estate investment. It represents the net amount of money moving into or out of your rental business after all expenses have been paid. Positive cash flow indicates that your property is generating profit, while negative cash flow means the property costs you money to hold every month.
How This Calculator Works
This tool breaks down the profitability of a potential investment using specific real estate metrics:
Monthly Cash Flow: Calculated by subtracting total monthly expenses (mortgage, tax, insurance, HOA, vacancy allowance) from the gross rental income.
Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (down payment). It's calculated as (Annual Cash Flow / Total Cash Invested) × 100.
Cap Rate: The Capitalization Rate indicates the potential return on investment assuming the property was bought with cash. It helps compare different properties regardless of financing. Formula: (Net Operating Income / Purchase Price) × 100.
What is a Good Cash on Cash Return?
While targets vary by investor and market, a Cash on Cash return of 8-12% is generally considered good for long-term buy-and-hold strategies. In highly competitive markets, investors might accept 4-6% expecting appreciation, while aggressive investors may seek 15%+ in riskier areas.
The Importance of Vacancy and Maintenance
Novice investors often overestimate profits by ignoring vacancy rates and maintenance costs. This calculator includes fields for Vacancy Rate (typically 5-8% depending on the area) and Maintenance/CapEx to provide a realistic view of the property's long-term performance.
function calculateCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('propPrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var tax = parseFloat(document.getElementById('annualTax').value);
var insurance = parseFloat(document.getElementById('annualInsurance').value);
var hoa = parseFloat(document.getElementById('monthlyHOA').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var capex = parseFloat(document.getElementById('capex').value);
var errorDiv = document.getElementById('errorMsg');
var resultsDiv = document.getElementById('resultsArea');
// 2. Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(years) ||
isNaN(rent) || isNaN(tax) || isNaN(insurance) || isNaN(hoa) || isNaN(vacancyRate) || isNaN(capex)) {
errorDiv.style.display = 'block';
resultsDiv.style.display = 'none';
return;
} else {
errorDiv.style.display = 'none';
resultsDiv.style.display = 'block';
}
// 3. Calculation Logic
// Loan Calculation
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
// Monthly Mortgage Payment (P&I)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = years * 12;
var monthlyMortgage = 0;
if (rate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Monthly Expenses Calculation
var monthlyTax = tax / 12;
var monthlyInsurance = insurance / 12;
var vacancyCost = rent * (vacancyRate / 100);
var totalMonthlyOperatingExpenses = monthlyTax + monthlyInsurance + hoa + capex + vacancyCost;
var totalMonthlyOutflow = monthlyMortgage + totalMonthlyOperatingExpenses;
// Cash Flow Calculation
var monthlyCashFlow = rent – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// Returns Calculation
// NOI (Net Operating Income) = Annual Income – Operating Expenses (NOT including mortgage)
var annualOperatingExpenses = totalMonthlyOperatingExpenses * 12;
var annualGrossIncome = rent * 12; // Assuming full occupancy for NOI base, but vacancy is expense
// Adjusted NOI usually subtracts vacancy. Let's stick to standard: NOI = (Rent – Vacancy) – OpEx
var annualNOI = (annualGrossIncome – (vacancyCost * 12)) – (annualOperatingExpenses – (vacancyCost * 12));
// Simplified: NOI = (Rent * 12) – (OpExpenses * 12) 0) {
cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
}
// 4. Update UI
// Helper for currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('resExpenses').innerText = formatter.format(totalMonthlyOutflow);
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = formatter.format(monthlyCashFlow);
if (monthlyCashFlow >= 0) {
cfElement.className = "rp-result-value positive";
} else {
cfElement.className = "rp-result-value negative";
}
document.getElementById('resCocReturn').innerText = cashOnCash.toFixed(2) + "%";
var capElement = document.getElementById('resCapRate');
capElement.innerText = capRate.toFixed(2) + "%";
}