Determine the profitability of your potential real estate investment.
Purchase & Loan Details
Income & Expenses
Monthly Principal & Interest:$0.00
Total Monthly Expenses:$0.00
Net Monthly Cash Flow:$0.00
Annual Cash Flow:$0.00
Cash on Cash Return (CoC):0.00%
function calculateRental() {
// Get Inputs
var price = parseFloat(document.getElementById('rpc_price').value);
var downPayment = parseFloat(document.getElementById('rpc_down').value);
var rate = parseFloat(document.getElementById('rpc_rate').value);
var term = parseFloat(document.getElementById('rpc_term').value);
var rent = parseFloat(document.getElementById('rpc_rent').value);
var tax = parseFloat(document.getElementById('rpc_tax').value);
var insurance = parseFloat(document.getElementById('rpc_ins').value);
var otherExp = parseFloat(document.getElementById('rpc_repairs').value);
// Validation
if (isNaN(price) || isNaN(downPayment) || isNaN(rent)) {
alert("Please enter valid numbers for Price, Down Payment, and Rent.");
return;
}
// 1. Calculate Mortgage (P&I)
var loanAmount = price – downPayment;
var monthlyRate = (rate / 100) / 12;
var numPayments = term * 12;
var mortgagePayment = 0;
if (rate === 0) {
mortgagePayment = loanAmount / numPayments;
} else {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
if (isNaN(mortgagePayment)) mortgagePayment = 0;
// 2. Calculate Total Monthly Expenses
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var totalMonthlyExpenses = mortgagePayment + monthlyTax + monthlyIns + otherExp;
// 3. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 4. Calculate Cash on Cash Return
// CoC = Annual Cash Flow / Total Cash Invested (Down payment is the proxy here, could add closing costs if needed)
var cashInvested = downPayment;
var cocReturn = 0;
if (cashInvested > 0) {
cocReturn = (annualCashFlow / cashInvested) * 100;
}
// Display Results
document.getElementById('rpc_result_box').style.display = 'block';
document.getElementById('res_mortgage').innerText = "$" + mortgagePayment.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById('res_expenses').innerText = "$" + totalMonthlyExpenses.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
var cfElement = document.getElementById('res_cashflow');
cfElement.innerText = "$" + monthlyCashFlow.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
// Color coding for cash flow
if (monthlyCashFlow < 0) {
cfElement.style.color = "#c0392b";
} else {
cfElement.style.color = "#27ae60";
}
document.getElementById('res_annual_cf').innerText = "$" + annualCashFlow.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById('res_coc').innerText = cocReturn.toFixed(2) + "%";
}
What is Rental Property Cash Flow?
Rental property cash flow is the net amount of money left over from your rental property income after all operating expenses and mortgage payments have been paid. It is a critical metric for real estate investors because it indicates whether an investment is generating profit or draining resources.
Positive Cash Flow: This occurs when your monthly rental income exceeds your total monthly expenses. Positive cash flow provides passive income and financial stability for investors.
Negative Cash Flow: This happens when expenses exceed income. While some investors accept negative cash flow in hopes of future property appreciation, it generally carries higher risk.
How to Calculate Cash Flow on a Rental Property
To accurately calculate the cash flow of a potential investment, you need to account for all inflows and outflows of cash. The basic formula used in our calculator is:
Cash Flow = Gross Rental Income – Total Expenses
Total Expenses typically include:
Mortgage Payment (P&I): The principal and interest paid to the lender.
Property Taxes: Annual taxes levied by the local government, divided by 12 for monthly calculation.
Insurance: Landlord insurance policy premiums.
Operating Expenses: HOA fees, maintenance reserves, property management fees, and vacancy reserves.
Understanding Cash on Cash Return (CoC)
While cash flow tells you the dollar amount you make, the Cash on Cash Return tells you the percentage return on the actual cash you invested. This is distinct from the total Return on Investment (ROI) because it focuses only on the cash deployed (down payment) relative to the cash received (annual cash flow).
For example, if you invest $50,000 as a down payment and the property generates $5,000 in annual positive cash flow, your Cash on Cash return is 10%. This metric helps you compare the efficiency of your money across different investment opportunities.
Tips for Improving Rental Property Cash Flow
If your calculation shows negative or low cash flow, consider these strategies:
Increase Rent: Ensure your rent matches the current market rates. Minor upgrades can often justify higher rent.
Refinance: If interest rates have dropped, refinancing your mortgage can lower your monthly P&I payment.
Appeal Property Taxes: If your tax assessment is too high, appealing it can lower your annual tax burden.
Reduce Vacancy: Long-term tenants reduce turnover costs and vacancy loss. Keep your tenants happy to ensure consistent income.
Use the Rental Property Cash Flow Calculator above to run different scenarios. Adjusting the purchase price, down payment, or rental income can drastically change your return profile.