Rental Property Cash Flow Calculator
Property & Loan Details
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Income & Expenses
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Gross Monthly Income:
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Monthly Mortgage (P&I):
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Monthly Op. Expenses:
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Net Monthly Cash Flow:
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Annual Cash Flow
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Cash on Cash Return
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Cap Rate
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Total Cash Invested
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Mastering Rental Property Analysis
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. The difference between a successful investment and a money pit often comes down to the numbers.
This Rental Property Cash Flow Calculator is designed to help investors evaluate the viability of a potential deal. By analyzing income, operating expenses, and financing costs, you can determine if a property will yield positive cash flow or drain your bank account.
How is Cash Flow Calculated?
Cash flow is the net amount of money moving into or out of a business. For rental properties, the formula is straightforward but requires detail:
Cash Flow = Gross Rental Income – (Operating Expenses + Debt Service)
Where Operating Expenses include taxes, insurance, vacancy provisions, maintenance, management fees, and capital expenditures (CapEx). Debt Service is your monthly mortgage payment (Principal & Interest).
Understanding the Metrics
- NOI (Net Operating Income): This is the profitability of the property before paying the mortgage. It is calculated as Income minus Operating Expenses. Lenders look at this to determine if the property can support the loan.
- Cap Rate (Capitalization Rate): Calculated as (NOI / Purchase Price) × 100. It measures the natural rate of return of the property assuming you paid all cash. A higher Cap Rate usually indicates higher risk or higher return potential.
- Cash-on-Cash Return (CoC): This is arguably the most important metric for investors using leverage. It measures the annual cash flow divided by the actual cash you invested (Down payment + Closing costs). It tells you how hard your actual dollars are working for you.
What is the "1% Rule"?
The 1% rule is a quick screening tool used by investors. It states that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 house should rent for at least $2,000/month. While not a hard rule, properties meeting this criteria are more likely to cash flow positively.
Estimating Expenses
Novice investors often underestimate expenses. A safe rule of thumb is to allocate:
- Vacancy: 5-8% (about 2-3 weeks a year).
- Maintenance & CapEx: 10-15% of rent. Roofs, HVACs, and water heaters eventually break; you must save monthly for these future costs.
- Property Management: 8-10% of rent if you hire a professional manager.
Conclusion
Use this calculator to run scenarios. What if interest rates rise? What if vacancy is higher than expected? By stress-testing your numbers, you can make data-driven decisions and build a robust real estate portfolio.