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 profit. To ensure a smart investment, you must analyze the numbers. This Rental Property Cash Flow Calculator helps investors determine if a specific property will generate positive income or become a financial burden.
What is Cash Flow?
Cash flow is the net amount of money moving in and out of a business or investment. In real estate, it represents the money left over after all operating expenses and mortgage payments have been made from the collected rental income. Positive cash flow means you are making a profit every month, while negative cash flow implies you are losing money to hold the property.
Key Metrics Explained
Successful investors rely on specific metrics to compare properties accurately. Our calculator provides the following essential figures:
NOI (Net Operating Income): This is the total income generated by the property minus all operating expenses (taxes, insurance, maintenance, vacancy) but excluding mortgage payments. It measures the property's raw profitability.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price, the Cap Rate represents the rate of return on the property if you bought it entirely with cash. It is the gold standard for comparing the profitability of different properties regardless of financing.
Cash on Cash Return: This measures the return on the actual cash you invested (down payment + closing costs). It is calculated as Annual Cash Flow / Total Cash Invested. This is often more important for leverage-focused investors than Cap Rate.
How to Calculate Mortgage Payments
The largest expense for most real estate investors is the debt service (mortgage). This calculator uses the standard amortization formula to determine your monthly principal and interest payments based on your loan amount, interest rate, and term length.
Estimating Expenses
Novice investors often underestimate expenses. Beyond the mortgage, you must account for:
Vacancy: Properties aren't rented 365 days a year. A 5-8% vacancy allowance is standard.
Maintenance: Roofs leak and toilets break. Budgeting 1% of the property value annually is a safe rule of thumb.
Management Fees: If you hire a property manager, expect to pay 8-10% of the monthly rent.
Using this calculator allows you to stress-test your investment against these variables to ensure long-term financial health.
function calculateROI() {
// 1. Retrieve and Parse Inputs
var price = parseFloat(document.getElementById('propPrice').value);
var downPercent = parseFloat(document.getElementById('downPay').value); // ID mismatch check: HTML ID is 'downPayment'
// Correction: Fetching by correct ID
var downPercentVal = parseFloat(document.getElementById('downPayment').value);
var interestRateVal = parseFloat(document.getElementById('interestRate').value);
var loanTermVal = parseFloat(document.getElementById('loanTerm').value);
var monthlyRentVal = parseFloat(document.getElementById('monthlyRent').value);
var vacancyRateVal = parseFloat(document.getElementById('vacancyRate').value);
var annualTaxVal = parseFloat(document.getElementById('annualTax').value);
var annualInsuranceVal = parseFloat(document.getElementById('annualInsurance').value);
var annualMaintVal = parseFloat(document.getElementById('annualMaint').value);
var mgmtFeeVal = parseFloat(document.getElementById('mgmtFee').value);
// Validation
if (isNaN(price) || isNaN(downPercentVal) || isNaN(interestRateVal) || isNaN(monthlyRentVal)) {
alert("Please enter valid numbers for Price, Down Payment, Interest Rate, and Rent.");
return;
}
// 2. Loan Calculations
var downPaymentAmt = price * (downPercentVal / 100);
var loanAmount = price – downPaymentAmt;
var monthlyRate = (interestRateVal / 100) / 12;
var numberOfPayments = loanTermVal * 12;
// Monthly Mortgage (Principal + Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyMortgage = 0;
if (interestRateVal === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 3. Income Calculations
var potentialAnnualRent = monthlyRentVal * 12;
var vacancyLoss = potentialAnnualRent * (vacancyRateVal / 100);
var effectiveGrossIncome = potentialAnnualRent – vacancyLoss;
// 4. Expense Calculations
var annualMgmtFee = (monthlyRentVal * (mgmtFeeVal / 100)) * 12;
var totalOperatingExpenses = annualTaxVal + annualInsuranceVal + annualMaintVal + annualMgmtFee;
// 5. Metric Calculations
var annualNOI = effectiveGrossIncome – totalOperatingExpenses;
var annualDebtService = monthlyMortgage * 12;
var annualCashFlow = annualNOI – annualDebtService;
var monthlyCashFlow = annualCashFlow / 12;
// Cap Rate = (NOI / Current Market Value) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) * 100
// Assuming Cash Invested is just Down Payment for this simple calc (ignoring closing costs to keep inputs manageable)
var cashOnCash = 0;
if (downPaymentAmt > 0) {
cashOnCash = (annualCashFlow / downPaymentAmt) * 100;
}
// 6. Formatting Helper
function formatCurrency(num) {
return new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(num);
}
function formatPercent(num) {
return num.toFixed(2) + "%";
}
// 7. Output Results
document.getElementById('resCashFlow').innerHTML = formatCurrency(monthlyCashFlow);
document.getElementById('resNOI').innerHTML = formatCurrency(annualNOI);
document.getElementById('resCOC').innerHTML = formatPercent(cashOnCash);
document.getElementById('resCapRate').innerHTML = formatPercent(capRate);
document.getElementById('resMortgage').innerHTML = formatCurrency(monthlyMortgage);
// Styling colors for positive/negative flow
var cfElement = document.getElementById('resCashFlow');
if (monthlyCashFlow >= 0) {
cfElement.className = "result-value positive";
} else {
cfElement.className = "result-value negative";
}
// Show results area
document.getElementById('resultsArea').style.display = "block";
}