Rental Property Cash Flow Calculator
Purchase & Loan Details
Income & Expenses
Monthly Analysis
Gross Monthly Income:
$0.00
Mortgage Payment (P&I):
$0.00
Total Operating Expenses:
$0.00
Net Monthly Cash Flow:
$0.00
Investment Returns
Cash on Cash Return (ROI):
0.00%
Cap Rate:
0.00%
Net Operating Income (Annual):
$0.00
Total Cash Needed to Close:
$0.00
Understanding Rental Property Cash Flow
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 Rental Property Cash Flow Calculator is designed to help investors analyze the viability of a potential purchase by accounting for all associated income and expenses.
What is Cash Flow?
Cash flow represents the net amount of cash moving in and out of a business or investment. In real estate terms, it is the money left over from your rental income after all operating expenses and mortgage payments have been made. Positive cash flow means the property generates profit every month, while negative cash flow implies you are losing money to hold the property.
Key Metrics Used in This Calculator
- NOI (Net Operating Income): This is your annual income minus operating expenses (Taxes, Insurance, HOA, Vacancy, Maintenance), but before mortgage payments. It measures the property's raw profitability.
- Cap Rate (Capitalization Rate): Calculated as
NOI / Purchase Price. It represents the natural rate of return on the property if you bought it in all cash. It helps compare properties regardless of financing. - Cash on Cash Return (CoC): Calculated as
Annual Cash Flow / Total Cash Invested. This is arguably the most important metric for investors, as it tells you exactly how hard your actual invested dollars are working for you.
How to Estimate Expenses
Many new investors underestimate expenses. To get an accurate calculation, ensure you account for:
- Vacancy Rate: Properties won't be rented 100% of the time. A standard conservative estimate is 5% to 8% (roughly 2-3 weeks per year).
- Maintenance & Repairs: Things break. Setting aside 5% to 10% of monthly rent ensures you have funds for plumbing issues, painting, or appliance replacement.
- Property Management: Even if you plan to self-manage, it's wise to calculate a 10% management fee to see if the deal still makes sense should you decide to hire a professional later.
Frequently Asked Questions
What is a "Good" Cash on Cash Return?
While this varies by market and strategy, many investors target a Cash on Cash return of 8% to 12%. In highly appreciative markets, investors might accept lower cash flow (4-6%) in exchange for future equity growth.
Should I include appreciation in my calculation?
This calculator focuses on cash flow. While appreciation is a major benefit of real estate, it is speculative. Experienced investors advise buying for cash flow and treating appreciation as the "icing on the cake."