Rental Property Cash Flow Calculator
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Rental Property Cash Flow Calculator
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good investment. The Rental Property Cash Flow Calculator helps investors analyze a potential deal by breaking down income, operating expenses, and debt service to determine the true profitability of a rental unit.
What is Cash Flow in Real Estate?
Cash flow is the net amount of money moving in and out of a business or investment. For rental properties, it is calculated as:
Cash Flow = Total Income – (Operating Expenses + Mortgage Payments)
Positive cash flow means the property generates profit every month after all bills are paid. Negative cash flow means you are losing money to hold the property, banking solely on appreciation.
Key Metrics Calculated
- NOI (Net Operating Income): This is your profitability before mortgage payments are considered. It is calculated by subtracting operating expenses (taxes, insurance, maintenance, vacancy, etc.) from total rental income.
- Cash on Cash Return (CoC): This is the most critical metric for investors. It measures the annual return on the actual cash you invested (Down Payment + Closing Costs), rather than the total loan amount. A CoC of 8-12% is generally considered good in many markets.
- Vacancy Rate: Real estate isn't always occupied 100% of the time. This calculator sets aside a percentage of income to account for turnover periods between tenants.
How to Estimate Expenses
One common mistake new investors make is underestimating expenses. Always account for:
- Maintenance: Set aside 5-10% of rent for repairs (HVAC, plumbing, roofing).
- CapEx (Capital Expenditures): Long-term replacement costs for big-ticket items.
- Management Fees: Even if you self-manage, it's wise to factor in 8-10% to see if the deal still works if you hire a professional later.
Use this calculator to stress-test your investment. What happens if vacancy rises to 10%? What if insurance premiums go up? Adjust the inputs to see if the property remains cash flow positive.
function calculateRentalROI() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPaymentPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var propertyTax = parseFloat(document.getElementById('propertyTax').value);
var insurance = parseFloat(document.getElementById('insurance').value);
var maintenancePercent = parseFloat(document.getElementById('maintenancePercent').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var mgmtFeePercent = parseFloat(document.getElementById('mgmtFee').value);
var hoaFees = parseFloat(document.getElementById('hoaFees').value);
// Validation
if (isNaN(purchasePrice) || isNaN(monthlyRent)) {
alert("Please enter valid numbers for Price and Rent.");
return;
}
// 2. Calculate Loan and Initial Investment
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var totalInitialInvest = downPaymentAmount + closingCosts;
// 3. Calculate Monthly Mortgage (Principal & Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 4. Calculate Monthly Expenses
var monthlyTax = propertyTax / 12;
var monthlyInsurance = insurance / 12;
// Variable expenses based on rent
var monthlyMaintenance = monthlyRent * (maintenancePercent / 100);
var monthlyVacancy = monthlyRent * (vacancyRate / 100);
var monthlyMgmt = monthlyRent * (mgmtFeePercent / 100);
var totalMonthlyExpenses = monthlyTax + monthlyInsurance + monthlyMaintenance + monthlyVacancy + monthlyMgmt + hoaFees;
// 5. Calculate Returns
var noi = monthlyRent – totalMonthlyExpenses; // Net Operating Income (Monthly)
var monthlyCashFlow = noi – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
var cashOnCash = (annualCashFlow / totalInitialInvest) * 100;
// 6. Display Results
// Format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resInitialInvest').innerText = formatter.format(totalInitialInvest);
document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('resExpenses').innerText = formatter.format(totalMonthlyExpenses);
document.getElementById('resNOI').innerText = formatter.format(noi);
var cfEl = document.getElementById('resMonthlyCashFlow');
cfEl.innerText = formatter.format(monthlyCashFlow);
cfEl.style.color = monthlyCashFlow >= 0 ? '#2f855a' : '#c53030'; // Green if positive, Red if negative
var annCfEl = document.getElementById('resAnnualCashFlow');
annCfEl.innerText = formatter.format(annualCashFlow);
annCfEl.style.color = annualCashFlow >= 0 ? '#2f855a' : '#c53030';
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cashOnCash.toFixed(2) + "%";
cocEl.style.color = cashOnCash >= 0 ? '#2f855a' : '#c53030';
// Show result box
document.getElementById('resultBox').style.display = 'block';
}