function calculateRentalROI() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value) || 0;
var interest = parseFloat(document.getElementById('interestRate').value) || 0;
var termYears = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancy = parseFloat(document.getElementById('vacancyRate').value) || 0;
var taxYear = parseFloat(document.getElementById('propertyTax').value) || 0;
var insYear = parseFloat(document.getElementById('insurance').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var pmPercent = parseFloat(document.getElementById('managementFee').value) || 0;
var hoa = parseFloat(document.getElementById('hoaFees').value) || 0;
// 1. Calculate Mortgage
var downAmount = price * (downPercent / 100);
var loanAmount = price – downAmount;
var monthlyRate = (interest / 100) / 12;
var totalMonths = termYears * 12;
var mortgage = 0;
if (monthlyRate > 0 && totalMonths > 0) {
mortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalMonths)) / (Math.pow(1 + monthlyRate, totalMonths) – 1);
} else if (totalMonths > 0) {
mortgage = loanAmount / totalMonths;
}
// 2. Calculate Income
var vacancyLoss = rent * (vacancy / 100);
var effectiveIncome = rent – vacancyLoss;
// 3. Calculate Operating Expenses
var monthlyTax = taxYear / 12;
var monthlyIns = insYear / 12;
var monthlyMaint = rent * (maintPercent / 100);
var monthlyPM = rent * (pmPercent / 100);
// Total Operating Expenses (excluding mortgage)
var operatingExpenses = monthlyTax + monthlyIns + monthlyMaint + monthlyPM + hoa;
// 4. Net Operating Income (NOI)
// NOI = Income – Operating Expenses (Vacancy is already removed from Income)
var monthlyNOI = effectiveIncome – operatingExpenses;
// 5. Cash Flow
var monthlyTotalExpenses = operatingExpenses + mortgage;
var monthlyCashFlow = effectiveIncome – monthlyTotalExpenses;
// 6. Returns
var totalInitialInvestment = downAmount + closing;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = monthlyNOI * 12;
var cocReturn = 0;
if (totalInitialInvestment > 0) {
cocReturn = (annualCashFlow / totalInitialInvestment) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// Display Results
document.getElementById('res-mortgage').innerText = '$' + mortgage.toFixed(2);
document.getElementById('res-expenses').innerText = '$' + monthlyTotalExpenses.toFixed(2);
document.getElementById('res-noi').innerText = '$' + monthlyNOI.toFixed(2);
var cfEl = document.getElementById('res-cashflow');
cfEl.innerText = '$' + monthlyCashFlow.toFixed(2);
if (monthlyCashFlow >= 0) {
cfEl.parentElement.classList.remove('negative');
cfEl.parentElement.style.color = '#27ae60';
} else {
cfEl.parentElement.classList.add('negative');
cfEl.parentElement.style.color = '#c0392b';
}
document.getElementById('res-coc').innerText = cocReturn.toFixed(2) + '%';
document.getElementById('res-cap').innerText = capRate.toFixed(2) + '%';
// Show result area
document.getElementById('results-area').style.display = 'block';
}
Understanding Rental Property Cash Flow
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, investors must accurately analyze the numbers before signing a contract. A Rental Property Cash Flow Calculator is the essential tool for determining if a potential investment will generate passive income or become a financial burden.
What is Cash Flow in Real Estate?
Cash flow is the net amount of money moving into or out of your rental business each month. It is calculated by taking your gross rental income and subtracting all expenses, including the mortgage, taxes, insurance, and operating costs. Positive cash flow means the property puts money in your pocket every month, while negative cash flow means you are paying out of pocket to keep the property.
Key Metrics Calculated
Net Operating Income (NOI): This is your profitability before debt service (mortgage). It equals your rental income minus operating expenses (like taxes, insurance, repairs). It does not include the mortgage payment.
Cash on Cash Return (CoC): This is arguably the most important metric for investors using leverage (loans). It measures the annual return on the actual cash you invested (down payment + closing costs), rather than the total value of the property. A CoC return of 8-12% is often considered a solid target for buy-and-hold investors.
Cap Rate (Capitalization Rate): This measures the rate of return on the property assuming you bought it with all cash. It helps compare the profitability of different properties regardless of how they are financed.
Hidden Expenses to Watch For
Many new investors fail because they underestimate expenses. This calculator includes fields for the "silent killers" of profitability:
Vacancy Rate: You won't have a tenant 12 months a year forever. Allocating 5-10% of rent for vacancy ensures you have reserves for turnover periods.
Maintenance & Repairs: Roofs leak and water heaters break. Setting aside 5-10% of monthly rent creates a "CapEx" (Capital Expenditure) fund for future repairs.
Property Management: Even if you self-manage now, calculating a 10% management fee ensures the deal still works if you decide to hire a professional later.
How to Interpret the Results
If the calculator shows a positive monthly cash flow, the property pays for itself and generates income. If the number is negative, re-evaluate your offer price, financing terms, or rental estimates. Remember, a high appreciation potential might justify lower cash flow in some markets, but cash flow is what keeps your business solvent during market downturns.