Success in real estate investing hinges on the numbers. Unlike purchasing a primary residence where emotion plays a significant role, buying a rental property is purely a mathematical decision. Our Rental Property Cash Flow Calculator is designed to help investors determine the viability of a potential investment by breaking down income, expenses, and financing costs.
What is Cash Flow?
Cash flow is the net amount of money moving in and out of a business or investment. In real estate, positive cash flow means the property generates more income from rent than it costs to operate (mortgage, taxes, insurance, maintenance). Negative cash flow implies the investor must pay out of pocket every month to keep the property running.
Pro Tip: Most seasoned investors look for a minimum cash flow of $100-$200 per unit per month after all expenses and reserves are accounted for.
Key Metrics Explained
Principal & Interest (P&I): This is your base mortgage payment calculated based on the loan amount, interest rate, and term length.
Operating Expenses: These include property taxes, landlord insurance, HOA fees, vacancy reserves, and maintenance costs. A common mistake is underestimating maintenance; always budget at least 1% of the property value annually.
Cash on Cash Return (CoC): This metric measures the annual return on the actual cash invested (down payment + closing costs). It is calculated as: (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100. A CoC return of 8-12% is generally considered good in the current market.
How to Use This Calculator
To get the most accurate results, input the purchase price and your expected financing terms. Be realistic with your rental income estimates by checking comparable properties in the area (comps). Don't forget to include annual expenses like taxes and insurance, which can drastically affect your bottom line. The "Maintenance / HOA" field should cover monthly homeowners association fees plus a buffer for repairs.
Why the 1% Rule Matters
A quick rule of thumb used by investors is the "1% Rule." It suggests that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 house should rent for $2,000/month. While harder to find in high-cost markets, properties that meet this rule are more likely to generate positive cash flow.
function calculateRental() {
// 1. Get Inputs using var
var price = parseFloat(document.getElementById('rp-price').value);
var rent = parseFloat(document.getElementById('rp-rent').value);
var downPercent = parseFloat(document.getElementById('rp-down').value);
var rate = parseFloat(document.getElementById('rp-rate').value);
var years = parseFloat(document.getElementById('rp-term').value);
var taxAnnual = parseFloat(document.getElementById('rp-tax').value);
var insAnnual = parseFloat(document.getElementById('rp-ins').value);
var maintMonthly = parseFloat(document.getElementById('rp-maint').value);
// 2. Validate Inputs
if (isNaN(price) || isNaN(rent) || isNaN(downPercent) || isNaN(rate) || isNaN(years)) {
alert("Please enter valid numbers for all fields.");
return;
}
// 3. Handle defaults for empty optional fields
if (isNaN(taxAnnual)) taxAnnual = 0;
if (isNaN(insAnnual)) insAnnual = 0;
if (isNaN(maintMonthly)) maintMonthly = 0;
// 4. Calculate Mortgage (P&I)
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = years * 12;
var monthlyMortgage = 0;
if (rate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 5. Calculate Expenses
var monthlyTax = taxAnnual / 12;
var monthlyIns = insAnnual / 12;
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + maintMonthly;
// 6. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 7. Calculate Cash on Cash Return
// Assumption: Closing costs are approx 3% of price (simplified for this calc, or just use downpayment if strictly defined)
// We will use just Down Payment for the base calculation to keep inputs simple, or we could add a closing cost input.
// Let's stick to Down Payment as the denominator for simplicity in this frontend view.
var totalInvested = downPaymentAmount;
var cocReturn = 0;
if (totalInvested > 0) {
cocReturn = (annualCashFlow / totalInvested) * 100;
}
// 8. Display Results
var mortgageEl = document.getElementById('res-mortgage');
var expensesEl = document.getElementById('res-expenses');
var cashflowEl = document.getElementById('res-cashflow');
var cocEl = document.getElementById('res-coc');
var resultBox = document.getElementById('rp-result-box');
mortgageEl.innerText = "$" + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
expensesEl.innerText = "$" + totalMonthlyExpenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
cashflowEl.innerText = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Style Cash Flow Text based on positive/negative
if (monthlyCashFlow >= 0) {
cashflowEl.className = "rp-result-value rp-highlight";
} else {
cashflowEl.className = "rp-result-value rp-highlight-neg";
}
cocEl.innerText = cocReturn.toFixed(2) + "%";
// Show results
resultBox.style.display = "block";
}