Investing in real estate is a powerful way to build wealth, but the difference between a successful investment and a financial burden often comes down to one metric: Cash Flow. This calculator is designed to help investors objectively analyze the profitability of a potential rental property by accounting for all income and expenses.
How This Calculator Works
While many simple calculators only look at rent minus the mortgage, a true cash flow analysis must account for the "hidden" costs of ownership. Our tool breaks down the calculation into three main components:
Gross Income: The total rent collected. We also factor in a vacancy rate, as properties are rarely occupied 100% of the time.
Operating Expenses: These are the costs to keep the property running, excluding the loan. This includes taxes, insurance, HOA fees, and critical reserves for maintenance and Capital Expenditures (CapEx).
Debt Service: The principal and interest payments on your loan.
Key Metrics Explained
When analyzing a deal, focus on these three outputs provided by the calculator:
1. Monthly Cash Flow
This is your "take-home" profit after all bills are paid.
Formula: (Rent – Vacancy) – (Operating Expenses + Mortgage).
Positive cash flow means the asset pays for itself and provides income. Negative cash flow means you are paying out of pocket to hold the property.
2. Net Operating Income (NOI)
NOI is the profitability of the property irrespective of financing. It is calculated as Income minus Operating Expenses (but before the mortgage). This metric is crucial for determining the property's intrinsic value.
3. Cash on Cash Return (CoC)
This measures the velocity of your money. It calculates the annual cash flow divided by the total cash invested (Down Payment + Closing Costs). A CoC of 8-12% is often considered a strong return in many real estate markets.
Why Include Maintenance and Vacancy?
Novice investors often make the mistake of ignoring maintenance (repairs) and vacancy. Even if a house is new, things break. Even in hot markets, tenants move out. Allocating 5-10% for maintenance and 5% for vacancy ensures you have cash reserves when these inevitable events occur, protecting your long-term ROI.
function calculateRentalCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPct = parseFloat(document.getElementById('downPaymentPercent').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var termYears = parseFloat(document.getElementById('loanTerm').value) || 30;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var taxYearly = parseFloat(document.getElementById('propertyTax').value) || 0;
var insuranceYearly = parseFloat(document.getElementById('insurance').value) || 0;
var hoaMonthly = parseFloat(document.getElementById('hoa').value) || 0;
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value) || 0;
var maintenancePct = parseFloat(document.getElementById('maintenanceRate').value) || 0;
// 2. Loan Calculations
var downPayment = price * (downPct / 100);
var loanAmount = price – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
var mortgagePayment = 0;
if (monthlyRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
mortgagePayment = loanAmount / numberOfPayments;
}
// 3. Expense Calculations
var vacancyCost = rent * (vacancyPct / 100);
var maintenanceCost = rent * (maintenancePct / 100);
var taxMonthly = taxYearly / 12;
var insuranceMonthly = insuranceYearly / 12;
var totalOperatingExpenses = taxMonthly + insuranceMonthly + hoaMonthly + vacancyCost + maintenanceCost;
var totalExpenses = totalOperatingExpenses + mortgagePayment;
// 4. Income & Returns Calculations
var effectiveGrossIncome = rent – vacancyCost; // Technically vacancy is an income loss, but usually subtracted from Gross Potential Rent
// Re-adjusting logic for clearer cash flow math:
// Cash Flow = (Rent) – (Vacancy Loss) – (Op Expenses) – (Mortgage)
// Note: vacancyCost is already calculated based on gross rent.
// Correct NOI = (Gross Rent – Vacancy) – (Op Expenses excluding vacancy which was subtracted from income)
// Let's stick to standard: NOI = Income – Operating Expenses.
// Operating Expenses here = Tax + Ins + HOA + Maint.
// We treat Vacancy as a reduction of income usually, but mathematically it's a cost flow.
var monthlyCashFlow = rent – vacancyCost – maintenanceCost – taxMonthly – insuranceMonthly – hoaMonthly – mortgagePayment;
var monthlyNOI = rent – vacancyCost – maintenanceCost – taxMonthly – insuranceMonthly – hoaMonthly;
var annualNOI = monthlyNOI * 12;
var annualCashFlow = monthlyCashFlow * 12;
// Cash on Cash Return
// Assuming ~3% closing costs for estimation if not provided, to make CoC realistic
var closingCosts = price * 0.03;
var totalCashInvested = downPayment + closingCosts;
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Formatting Output
var formatCurrency = function(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
};
var formatPercent = function(num) {
return num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
};
// 6. Display Results
var cfElement = document.getElementById('monthlyCashFlow');
cfElement.innerHTML = formatCurrency(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfElement.className = "result-value highlight-value positive";
} else {
cfElement.className = "result-value highlight-value negative";
}
document.getElementById('noiResult').innerHTML = formatCurrency(monthlyNOI);
document.getElementById('mortgageResult').innerHTML = formatCurrency(mortgagePayment);
document.getElementById('totalExpensesResult').innerHTML = formatCurrency(totalExpenses); // Includes mortgage
document.getElementById('cocResult').innerHTML = formatPercent(cashOnCash);
document.getElementById('capRateResult').innerHTML = formatPercent(capRate);
// Show result box
document.getElementById('resultsArea').style.display = 'block';
}