function calculateCashFlow() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('rpc-price').value) || 0;
var down = parseFloat(document.getElementById('rpc-down').value) || 0;
var rate = parseFloat(document.getElementById('rpc-rate').value) || 0;
var term = parseFloat(document.getElementById('rpc-term').value) || 0;
var rent = parseFloat(document.getElementById('rpc-rent').value) || 0;
var hoa = parseFloat(document.getElementById('rpc-hoa').value) || 0;
var tax = parseFloat(document.getElementById('rpc-tax').value) || 0;
var insurance = parseFloat(document.getElementById('rpc-insurance').value) || 0;
var vacancyRate = parseFloat(document.getElementById('rpc-vacancy').value) || 0;
var repairRate = parseFloat(document.getElementById('rpc-repairs').value) || 0;
// 2. Mortgage Calculation
var principal = price – down;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
var mortgagePayment = 0;
if (principal > 0 && monthlyRate > 0) {
mortgagePayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (principal > 0 && monthlyRate === 0) {
mortgagePayment = principal / numberOfPayments;
}
// 3. Expense Calculations
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var monthlyVacancy = rent * (vacancyRate / 100);
var monthlyRepairs = rent * (repairRate / 100);
var totalOperatingExpenses = monthlyTax + monthlyIns + hoa; // Excludes debt service and reserves for NOI usually, but we group them for cash flow
var totalReserves = monthlyVacancy + monthlyRepairs;
var totalOutflow = mortgagePayment + totalOperatingExpenses + totalReserves + hoa; // HOA is in OpEx
// Correcting OpEx grouping
var opExForNOI = monthlyTax + monthlyIns + hoa + monthlyVacancy + monthlyRepairs;
// 4. Metrics
var monthlyCashFlow = rent – mortgagePayment – opExForNOI;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = (rent * 12) – (opExForNOI * 12);
// ROI Metrics
var cashInvested = down; // Could include closing costs if added as input, for now, use Down
var cashOnCash = 0;
if (cashInvested > 0) {
cashOnCash = (annualCashFlow / cashInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Update UI
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('res-gross').innerText = formatter.format(rent);
document.getElementById('res-reserves').innerText = "-" + formatter.format(totalReserves);
document.getElementById('res-opex').innerText = "-" + formatter.format(monthlyTax + monthlyIns + hoa);
document.getElementById('res-mortgage').innerText = "-" + formatter.format(mortgagePayment);
var cfElement = document.getElementById('res-cashflow');
cfElement.innerText = formatter.format(monthlyCashFlow);
if (monthlyCashFlow >= 0) {
cfElement.className = "rpc-result-row highlight positive";
cfElement.style.color = "#2e7d32";
} else {
cfElement.className = "rpc-result-row highlight negative";
cfElement.style.color = "#c62828";
}
document.getElementById('res-coc').innerText = cashOnCash.toFixed(2) + "%";
document.getElementById('res-cap').innerText = capRate.toFixed(2) + "%";
document.getElementById('res-annual-cf').innerText = formatter.format(annualCashFlow);
// Show results
document.getElementById('rpc-results-area').style.display = "block";
}
Understanding Rental Property Investment Metrics
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee profit. To succeed, investors must analyze the numbers meticulously. This Rental Property Cash Flow Calculator is designed to help you determine the viability of a potential investment deal by breaking down income, expenses, and return on investment (ROI).
What is Monthly Cash Flow?
Cash flow is the net amount of money left over after all expenses have been paid from the rental income. Positive cash flow means the property is putting money into your pocket every month, while negative cash flow means you are paying out of pocket to hold the property.
The formula used in this calculator is:
Gross Income: Total rent collected.
Minus Operating Expenses: Property taxes, insurance, HOA fees.
Minus Reserves: Money set aside for vacancy and future repairs (CapEx).
Minus Debt Service: Your monthly mortgage principal and interest payments.
Equals: Net Monthly Cash Flow.
Key Metrics: Cap Rate vs. Cash on Cash Return
When analyzing a deal, you will often hear about Cap Rate and Cash on Cash (CoC) Return. While they seem similar, they measure different things:
1. Cash on Cash Return (CoC)
This is arguably the most important metric for investors using leverage (mortgages). It measures the annual return on the actual cash you invested (down payment + closing costs). A CoC return of 8-12% is often considered a solid benchmark for residential rentals, though this varies by market. It answers the question: "How hard is my money working for me?"
2. Capitalization Rate (Cap Rate)
Cap Rate measures the property's natural rate of return assuming you bought it in cash (no mortgage). It is calculated by dividing the Net Operating Income (NOI) by the Purchase Price. This metric helps you compare the profitability of the property itself, excluding your specific financing terms.
Why Include Vacancy and Repairs?
Novice investors often make the mistake of calculating cash flow based only on Rent minus Mortgage. This is dangerous. Real estate assets deteriorate, and tenants move out.
Our calculator encourages you to set aside a percentage of rent for Vacancy (typically 5-8%) and Repairs/CapEx (typically 5-10%). Even if you don't spend this money every month, it should be deducted from your cash flow calculations to ensure you have reserves when a water heater breaks or a tenant leaves.
How to Improve Cash Flow
If the calculator shows a negative or low cash flow, consider these adjustments:
Negotiate the Purchase Price: A lower price reduces your loan amount and monthly mortgage payment.
Increase the Down Payment: Putting more money down reduces the monthly debt service, instantly boosting cash flow (though it may lower your Cash on Cash return).
Raise Rents: Ensure you are charging market rate. Minor cosmetic improvements can often justify a rent increase.
Shop for Insurance/Rates: Lowering your fixed expenses like insurance premiums or refinancing to a lower interest rate directly impacts your bottom line.
Disclaimer: This calculator is for educational and informational purposes only. Actual financial figures may vary based on closing costs, fluctuating tax rates, and specific loan terms. Always consult with a financial advisor or real estate professional before making investment decisions.