Rental Property Cash Flow Calculator
Monthly Income
Fixed Monthly Expenses
Variable Expenses & Reserves
Monthly Financial Breakdown
Total Monthly Income:
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Operating Expenses (OpEx):
$0.00
Net Operating Income (NOI):
$0.00
Mortgage Service:
$0.00
Net Monthly Cash Flow:
$0.00
Annual Cash Flow Projection:
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Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any rental real estate investment. It represents the net amount of money left over each month after all operating expenses and debt service obligations have been paid. Unlike appreciation, which is speculative and realized only upon sale, cash flow provides tangible, spendable income immediately.
Why the "50% Rule" Isn't Enough
Many novice investors use the "50% Rule," which assumes that 50% of your gross rent will go toward operating expenses (excluding the mortgage). While this is a helpful quick filter, it is not accurate enough for a final purchase decision. Our Rental Property Cash Flow Calculator breaks down specific line items like vacancy rates, capital expenditures (CapEx), and property management fees to give you a precise financial picture.
Key Inputs Explained
- Vacancy Rate: No property is occupied 100% of the time. A standard conservative estimate is 5-8%, representing roughly 2-3 weeks of vacancy per year.
- CapEx (Capital Expenditures): This is a reserve fund for major replacements like roofs, HVAC systems, or water heaters. Setting aside 5-10% of rent ensures you aren't bankrupt when a major item breaks.
- Property Management: Even if you self-manage, you should account for your time or the future possibility of hiring a manager, typically costing 8-10% of gross rent.
- NOI (Net Operating Income): This is your income minus operating expenses, before the mortgage is paid. It is used to calculate the Cap Rate.
Interpreting Your Results
Positive Cash Flow: If the calculator shows a green number, the property pays for itself and generates profit. Most investors aim for at least $100-$200 per door in pure cash flow monthly.
Negative Cash Flow: If the number is red, the property costs you money to hold every month. Unless you are in a rapidly appreciating market and have high liquidity, negative cash flow is generally considered a risky investment strategy.
Improving Cash Flow
If your calculation shows a negative or low return, consider raising rents (if below market), protesting property tax assessments, shopping for cheaper insurance, or refinancing to a lower interest rate to reduce the monthly mortgage burden.