Investing in real estate is one of the most reliable ways to build wealth, but the success of an investment typically hinges on one critical metric: Cash Flow. This Rental Property Cash Flow Calculator helps investors analyze whether a potential property will generate income (positive cash flow) or cost money to hold (negative cash flow).
What is Cash Flow in Real Estate?
Cash flow is the net amount of cash moving into or out of a rental property business. It is calculated by taking the total income generated by the property and subtracting all expenses incurred.
The basic formula is: Cash Flow = Total Rental Income – (Operating Expenses + Debt Service)
Key Metrics Calculated
Net Operating Income (NOI): This calculates the profitability of the property before factoring in the mortgage. It is essential for determining the intrinsic value of the asset. Formula: Gross Income – Operating Expenses.
Cash on Cash Return: This percentage tells you how hard your actual invested money is working. Unlike simple ROI, it compares your annual pre-tax cash flow to the total cash invested (Down Payment + Closing Costs + Repairs). A "good" CoC return varies by market, but many investors target 8-12%.
Cap Rate (Capitalization Rate): A measure of a property's natural rate of return for a single year without considering debt. It helps compare properties of different sizes.
Example Scenario
Consider an investor purchasing a single-family home for $250,000.
They put 20% down ($50,000) and obtain a loan at 6.5% interest.
The property rents for $2,200 per month.
Expenses include taxes ($3,000/yr), insurance ($1,200/yr), and a maintenance reserve of 5%.
Using the calculator above, you can see that despite the high rent, the mortgage payment significantly impacts the final cash flow. If the mortgage is around $1,264 and operating expenses average $600, the monthly cash flow might be approximately $336. This positive cash flow ensures the property pays for itself while building equity.
Why Use a Calculator?
Many novice investors make the mistake of only subtracting the mortgage from the rent to determine profit. They forget to account for vacancy (months where the property sits empty), maintenance (roof repairs, plumbing issues), and management fees. This calculator forces you to account for these "hidden" costs to provide a realistic picture of your investment's potential.
function calculateRental() {
// Retrieve inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPercent = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var repairCosts = parseFloat(document.getElementById('repairCosts').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value) || 0;
var annualTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var annualIns = parseFloat(document.getElementById('insurance').value) || 0;
var monthlyHOA = parseFloat(document.getElementById('hoa').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var mgmtPercent = parseFloat(document.getElementById('management').value) || 0;
// 1. Calculate Mortgage
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = years * 12;
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
if (years === 0) monthlyMortgage = 0; // Handle cash purchase scenario logically if term is 0
// 2. Calculate Income
var grossMonthlyIncome = rent;
var vacancyLoss = rent * (vacancyPercent / 100);
var effectiveGrossIncome = grossMonthlyIncome – vacancyLoss;
// 3. Calculate Expenses
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var monthlyMaint = rent * (maintPercent / 100);
var monthlyMgmt = rent * (mgmtPercent / 100);
var totalMonthlyExpenses = monthlyTax + monthlyIns + monthlyHOA + monthlyMaint + monthlyMgmt;
// 4. Calculate Key Metrics
var monthlyNOI = effectiveGrossIncome – totalMonthlyExpenses;
var monthlyCashFlow = monthlyNOI – monthlyMortgage;
var annualNOI = monthlyNOI * 12;
var annualCashFlow = monthlyCashFlow * 12;
var totalInitialInvestment = downPaymentAmount + closingCosts + repairCosts;
var cocReturn = 0;
if (totalInitialInvestment > 0) {
cocReturn = (annualCashFlow / totalInitialInvestment) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Display Results
var resultArea = document.getElementById('results-area');
resultArea.style.display = 'block';
// Format Helper
function formatCurrency(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('res-gross').innerText = formatCurrency(grossMonthlyIncome);
document.getElementById('res-vacancy').innerText = '-' + formatCurrency(vacancyLoss);
document.getElementById('res-expenses').innerText = '-' + formatCurrency(totalMonthlyExpenses);
document.getElementById('res-noi').innerText = formatCurrency(monthlyNOI);
document.getElementById('res-mortgage').innerText = '-' + formatCurrency(monthlyMortgage);
var cfElement = document.getElementById('res-cashflow');
cfElement.innerText = formatCurrency(monthlyCashFlow);
if (monthlyCashFlow >= 0) {
cfElement.className = "positive-cf";
} else {
cfElement.className = "negative-cf";
}
document.getElementById('res-coc').innerText = cocReturn.toFixed(2) + '%';
document.getElementById('res-cap').innerText = capRate.toFixed(2) + '%';
}