function calculateRental() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('prop_price').value) || 0;
var downPercent = parseFloat(document.getElementById('prop_down_percent').value) || 0;
var rate = parseFloat(document.getElementById('prop_rate').value) || 0;
var term = parseFloat(document.getElementById('prop_term').value) || 0;
var closingCosts = parseFloat(document.getElementById('prop_closing').value) || 0;
var rent = parseFloat(document.getElementById('prop_rent').value) || 0;
var annualTax = parseFloat(document.getElementById('prop_tax').value) || 0;
var annualIns = parseFloat(document.getElementById('prop_insurance').value) || 0;
var monthlyHoa = parseFloat(document.getElementById('prop_hoa').value) || 0;
var vacancyRate = parseFloat(document.getElementById('prop_vacancy').value) || 0;
var capexRate = parseFloat(document.getElementById('prop_capex').value) || 0;
// 2. Loan Calculations
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var monthlyRate = rate / 100 / 12;
var numberOfPayments = term * 12;
var monthlyMortgage = 0;
if (loanAmount > 0 && monthlyRate > 0) {
monthlyMortgage = loanAmount * monthlyRate * (Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && monthlyRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 3. Expense Calculations
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var monthlyVacancy = rent * (vacancyRate / 100);
var monthlyCapex = rent * (capexRate / 100);
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + monthlyHoa + monthlyVacancy + monthlyCapex;
var annualOperatingExpenses = (monthlyTax + monthlyIns + monthlyHoa + monthlyVacancy + monthlyCapex) * 12;
// 4. Profitability Metrics
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI) = Gross Income – Operating Expenses (Excluding Mortgage)
var annualNOI = (rent * 12) – annualOperatingExpenses;
// Total Cash Invested
var totalInvestment = downPayment + closingCosts;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested
var cocReturn = 0;
if (totalInvestment > 0) {
cocReturn = (annualCashFlow / totalInvestment) * 100;
}
// Cap Rate = NOI / Purchase Price
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
var percentFormatter = new Intl.NumberFormat('en-US', {
style: 'percent',
minimumFractionDigits: 2,
maximumFractionDigits: 2,
});
// Set Values
document.getElementById('res_monthly_cf').innerText = formatter.format(monthlyCashFlow);
document.getElementById('res_coc').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('res_cap').innerText = capRate.toFixed(2) + "%";
document.getElementById('res_expense').innerText = formatter.format(totalMonthlyExpenses);
document.getElementById('res_mortgage').innerText = formatter.format(monthlyMortgage);
// Styling for positive/negative cash flow
var cfElement = document.getElementById('res_monthly_cf');
if (monthlyCashFlow >= 0) {
cfElement.style.color = "#27ae60";
} else {
cfElement.style.color = "#c0392b";
}
// Show Results container
document.getElementById('results').style.display = 'block';
}
Understanding Rental Property Analysis: A Complete Guide
Investing in real estate is one of the most proven pathways to wealth generation, but simply buying a property and renting it out does not guarantee a profit. Successful real estate investing relies heavily on the numbers. Using a Rental Property Cash Flow Calculator is essential to determine if a specific deal will generate passive income or become a financial burden.
Why Cash Flow is King
Cash flow represents the money left over after all expenses are paid. While property appreciation is a nice bonus, positive cash flow ensures that the business stays afloat during market downturns. It is the lifeblood of a rental business.
Positive Cash Flow: Your tenants are paying for your mortgage, expenses, and putting extra money in your pocket every month.
Negative Cash Flow: You are personally subsidizing the tenant's housing costs. This is risky and unsustainable for most investors.
Key Metrics Explained
Our calculator breaks down the three most critical metrics for analyzing a rental deal:
1. Net Operating Income (NOI)
NOI is the total income the property generates minus all operating expenses (taxes, insurance, maintenance, vacancy), excluding the mortgage payment. It measures the raw profitability of the asset itself, regardless of how it is financed.
2. Cap Rate (Capitalization Rate)
The Cap Rate is calculated by dividing the NOI by the purchase price. It allows you to compare the profitability of different properties without considering the financing structure. A higher Cap Rate generally indicates a better return, though often associated with higher risk areas.
Formula:Cap Rate = (NOI / Purchase Price) x 100
3. Cash-on-Cash Return (CoC)
This is arguably the most important metric for leverage investors. It measures the annual cash flow relative to the actual cash you invested (Down Payment + Closing Costs). This compares your real estate return to other investments like stocks or bonds.
Formula:CoC = (Annual Cash Flow / Total Cash Invested) x 100
Estimating Expenses Correctly
New investors often overestimate profit by ignoring "hidden" costs. When using the calculator above, ensure you account for:
Vacancy Rate: Properties won't be rented 365 days a year. A standard rule of thumb is 5-8% (about 2-4 weeks of vacancy per year).
Repairs & CapEx: Even if a house is new, things break. Set aside 5-10% of monthly rent for future roof replacements, water heaters, and general wear and tear.
Property Management: Even if you self-manage now, analyze the deal as if you are paying a manager (typically 8-10%) to ensure the deal works if you decide to outsource later.
How to Use This Calculator
Enter Purchase Details: Input the asking price and your loan terms. Don't forget closing costs, which usually range from 2% to 5% of the price.
Input Rental Income: Be realistic. Check local comps (comparables) on sites like Zillow or Rentometer.
Detail Your Expenses: Taxes and insurance are mandatory, but don't skip the "Vacancy" and "Repairs" fields. These reserve funds save you from bankruptcy when big repairs hit.
Analyze the Output: Look for a positive Monthly Cash Flow and a Cash-on-Cash return that beats the stock market (typically aiming for 8-12% or higher).