Rental Property Cash Flow Calculator
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Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any rental real estate investment. It is the net amount of cash moving into or out of a business, project, or financial product. For real estate investors, cash flow is calculated by subtracting all operating expenses and mortgage payments from the total rental income.
Positive cash flow means your property generates more income than it costs to own and operate, providing you with passive income. Negative cash flow means you are losing money every month, which is generally sustainable only if you are banking on significant property appreciation.
How to Use This Calculator
Our Rental Property Cash Flow Calculator is designed to give you a comprehensive view of your potential investment. Here is how to interpret the inputs:
- Purchase Price & Loan Details: These determine your mortgage payment, which is usually the largest monthly expense.
- Vacancy Rate: Properties aren't rented 100% of the time. A standard conservative estimate is 5-8%, representing about one month of vacancy every 12-18 months.
- Maintenance & CapEx: Many new investors forget this. "Maintenance" covers small fixes (leaky faucets), while "CapEx" (Capital Expenditures) saves for big ticket items like roof replacement or new HVAC systems. Setting aside 5-10% for each is prudent.
- Property Management: Even if you plan to self-manage, it is wise to factor in 8-10% for management to ensure the deal works if you decide to hire a professional later.
Key Metrics Explained
The calculator provides several crucial metrics beyond just raw cash flow:
1. Net Operating Income (NOI)
NOI is the total income generated by the property minus all operating expenses (vacancy, taxes, insurance, management, repairs), excluding the mortgage payment. This metric helps compare the profitability of properties regardless of how they are financed.
2. Cash on Cash Return (CoC)
This calculates the cash income earned on the cash invested in the property.
Formula: Annual Cash Flow / Total Cash Invested (Down Payment + Closing Costs).
A CoC return of 8-12% is generally considered a solid target for residential rentals.
3. Cap Rate (Capitalization Rate)
Cap Rate indicates the rate of return on a real estate investment property based on the income that the property is expected to generate.
Formula: Annual NOI / Purchase Price.
This helps compare the relative value of different properties in a market.
Why Cash Flow Matters More Than Appreciation
While appreciation (the increase in property value over time) builds wealth, cash flow pays the bills. In economic downturns, property values may dip, but a property with strong positive cash flow can be held indefinitely without financial stress. Focusing on cash flow ensures your investment is an asset, not a liability.
// Helper function to format currency
function formatCurrency(num) {
return new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(num);
}
// Helper function to format percentage
function formatPercent(num) {
return num.toFixed(2) + '%';
}
function calculateMortgageEstimate() {
// Optional: Auto-fill down payment as 20% if empty and price is entered
var price = parseFloat(document.getElementById('purchasePrice').value);
var downInput = document.getElementById('downPayment');
if (!isNaN(price) && downInput.value === ") {
downInput.value = (price * 0.20).toFixed(0);
}
}
function calculateCashFlow() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var down = parseFloat(document.getElementById('downPayment').value) || 0;
var rate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 30;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value) || 0;
var tax = parseFloat(document.getElementById('propertyTax').value) || 0;
var insurance = parseFloat(document.getElementById('insurance').value) || 0;
var hoa = parseFloat(document.getElementById('hoaFee').value) || 0;
var repairPct = parseFloat(document.getElementById('maintenance').value) || 0;
var mgmtPct = parseFloat(document.getElementById('mgmtFee').value) || 0;
var capexPct = parseFloat(document.getElementById('capex').value) || 0;
// 2. Calculate Mortgage (P&I)
var loanAmount = price – down;
var monthlyMortgage = 0;
if (loanAmount > 0 && rate > 0) {
var monthlyRate = (rate / 100) / 12;
var numPayments = years * 12;
monthlyMortgage = loanAmount * monthlyRate * (Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else if (loanAmount > 0 && rate === 0) {
monthlyMortgage = loanAmount / (years * 12);
}
// 3. Calculate Monthly Operating Expenses
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var vacancyCost = rent * (vacancyPct / 100);
var repairCost = rent * (repairPct / 100);
var mgmtCost = rent * (mgmtPct / 100);
var capexCost = rent * (capexPct / 100);
var operatingExpenses = monthlyTax + monthlyIns + hoa + vacancyCost + repairCost + mgmtCost + capexCost;
var totalMonthlyExpenses = operatingExpenses + monthlyMortgage;
// 4. Calculate Key Metrics
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// NOI = Rent – Operating Expenses (No Mortgage)
var monthlyNOI = rent – operatingExpenses;
var annualNOI = monthlyNOI * 12;
// Cash on Cash Return = Annual Cash Flow / Total Invested
// Assuming Total Invested = Down Payment for this simple calculator
// (In reality, would include closing costs and rehab)
var investedCash = down;
var cocReturn = 0;
if (investedCash > 0) {
cocReturn = (annualCashFlow / investedCash) * 100;
}
// Cap Rate = Annual NOI / Purchase Price
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Display Results
document.getElementById('resCashFlow').innerHTML = formatCurrency(monthlyCashFlow);
document.getElementById('resCashFlow').style.color = monthlyCashFlow >= 0 ? '#27ae60' : '#c0392b';
document.getElementById('resNOI').innerHTML = formatCurrency(monthlyNOI);
document.getElementById('resTotalExp').innerHTML = formatCurrency(totalMonthlyExpenses);
document.getElementById('resMortgage').innerHTML = formatCurrency(monthlyMortgage);
document.getElementById('resCoC').innerHTML = formatPercent(cocReturn);
document.getElementById('resCapRate').innerHTML = formatPercent(capRate);
document.getElementById('resultsArea').style.display = 'block';
}