function calculateRental() {
// 1. Get Values
var price = parseFloat(document.getElementById('rp_price').value) || 0;
var closing = parseFloat(document.getElementById('rp_closing').value) || 0;
var downPercent = parseFloat(document.getElementById('rp_down').value) || 0;
var rate = parseFloat(document.getElementById('rp_rate').value) || 0;
var term = parseFloat(document.getElementById('rp_term').value) || 0;
var rent = parseFloat(document.getElementById('rp_rent').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('rp_vacancy').value) || 0;
var tax = parseFloat(document.getElementById('rp_tax').value) || 0;
var insurance = parseFloat(document.getElementById('rp_insurance').value) || 0;
var hoa = parseFloat(document.getElementById('rp_hoa').value) || 0;
var maint = parseFloat(document.getElementById('rp_maint').value) || 0;
// 2. Calculate Loan Details
var downAmount = price * (downPercent / 100);
var loanAmount = price – downAmount;
var totalCashInvested = downAmount + closing;
// Mortgage Calculation (Principal & Interest)
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
var mortgagePayment = 0;
if (rate > 0 && term > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (term > 0) {
mortgagePayment = loanAmount / numberOfPayments;
}
// 3. Calculate Expenses
var vacancyCost = rent * (vacancyPercent / 100);
var operatingExpenses = tax + insurance + hoa + maint + vacancyCost; // Excludes Mortgage
var totalExpenses = operatingExpenses + mortgagePayment; // Includes Mortgage
// 4. Calculate Key Metrics
var noi = rent – operatingExpenses; // Net Operating Income
var monthlyCashFlow = rent – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = noi * 12;
// Cap Rate = (Annual NOI / Purchase Price) * 100
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// 5. Update UI
document.getElementById('res_mortgage').innerText = '$' + mortgagePayment.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_total_exp').innerText = '$' + totalExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_noi').innerText = '$' + noi.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('res_cashflow');
cfElement.innerText = '$' + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlyCashFlow >= 0) {
cfElement.className = "rp-result-value rp-highlight";
} else {
cfElement.className = "rp-result-value rp-highlight-neg";
}
document.getElementById('res_cap').innerText = capRate.toFixed(2) + '%';
document.getElementById('res_coc').innerText = cocReturn.toFixed(2) + '%';
// Show results
document.getElementById('rp_results').style.display = 'block';
}
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but the success of an investment property often hinges on one critical metric: Cash Flow. Our Rental Property Cash Flow Calculator helps investors analyze potential deals by breaking down income, operating expenses, and financing costs to determine the true profitability of a rental unit.
What is Positive Cash Flow?
Positive cash flow occurs when a property's gross rental income exceeds all of its expenses, including the mortgage, taxes, insurance, and maintenance. This surplus income is "passive income" that goes directly into your pocket. Conversely, negative cash flow means you are losing money every month to hold the property, which is a risky strategy often reliant solely on future appreciation.
Key Metrics Calculated
This tool provides three essential financial indicators for real estate investors:
Net Operating Income (NOI): This is the total income generated by the property minus all operating expenses (vacancy, taxes, insurance, repairs). Crucially, NOI does not include mortgage payments. It measures the profitability of the property itself, independent of how it is financed.
Cap Rate (Capitalization Rate): Calculated as (Annual NOI / Purchase Price) × 100, the Cap Rate helps you compare the return of a property against others, assuming you bought it with all cash. A higher Cap Rate generally indicates a better return, though often with higher risk.
Cash on Cash Return (CoC): This is arguably the most important metric for financing investors. It measures the annual cash flow relative to the actual cash you invested (Down Payment + Closing Costs). It answers the question: "What is the return on the actual dollars I put into this deal?"
Estimating Expenses Accurately
Novice investors often overestimate cash flow by underestimating expenses. When using the calculator, ensure you account for:
Vacancy Rate: Properties won't be rented 365 days a year. A standard conservative estimate is 5-8% (roughly 2-3 weeks of vacancy per year).
Maintenance & Repairs: Even if a house is new, things break. Budgeting 1% of the property value per year or 10% of the monthly rent is a prudent safety net.
HOA Fees: If the property is in a managed community, Homeowners Association fees can significantly eat into profits.
The 1% Rule
A common rule of thumb in real estate is the "1% Rule." This rule suggests that for a property to cash flow positively, the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month. While difficult to find in many modern markets, this rule remains a useful quick filter for screening potential investment properties before running a detailed analysis with our calculator.