function calculateCashFlow() {
// Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
// Validate Inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(years) || isNaN(rent) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Loan Calculations
var loanAmount = price – down;
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);
}
// Total Monthly Outflow
var totalMonthlyExpenses = monthlyMortgage + expenses;
// Cash Flow Calculation
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// ROI Calculation (Cash on Cash Return)
// Assumes Down Payment is the total cash invested for simplicity
var roi = 0;
if (down > 0) {
roi = (annualCashFlow / down) * 100;
}
// Formatting Output
var fmtMoney = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('res-mortgage').innerText = fmtMoney.format(monthlyMortgage);
document.getElementById('res-expenses').innerText = fmtMoney.format(totalMonthlyExpenses);
document.getElementById('res-income').innerText = fmtMoney.format(rent);
var cfElement = document.getElementById('res-cashflow');
cfElement.innerText = fmtMoney.format(monthlyCashFlow);
// Color coding for cash flow
cfElement.className = 'rp-result-value ' + (monthlyCashFlow >= 0 ? 'rp-positive' : 'rp-negative');
var roiElement = document.getElementById('res-roi');
roiElement.innerText = roi.toFixed(2) + "%";
roiElement.className = 'rp-result-value ' + (roi >= 0 ? 'rp-positive' : 'rp-negative');
// Show Results
document.getElementById('rp-result').style.display = 'block';
}
Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any rental property investment. It represents the net amount of money moving into or out of your business after all expenses have been paid. Positive cash flow means your property is generating profit every month, while negative cash flow implies you are losing money to hold the asset.
How is Cash Flow Calculated?
The formula for calculating rental property cash flow is relatively straightforward but requires accuracy in estimating expenses:
Gross Income: The total rent collected plus any other income (parking, laundry, etc.).
Operating Expenses: Property taxes, insurance, HOA fees, maintenance, and property management fees.
Debt Service: The principal and interest payments on your mortgage.
Cash on Cash Return (CoC ROI) is a metric used to measure the annual return on the actual cash invested in the property. Unlike standard ROI which might consider the total value of the asset, CoC specifically looks at the liquidity you put into the deal (Down Payment + Closing Costs + Rehab Costs).
A "good" Cash on Cash return is subjective, but many investors target 8-12% or higher. This calculator assumes your total cash invested is equal to your down payment input for simplicity.
Why Cash Flow Matters
While appreciation (the increase in property value over time) is a powerful wealth builder, it is speculative. Cash flow, on the other hand, is tangible income that can be used to reinvest, pay down debt, or cover personal living expenses. Properties with strong positive cash flow provide a safety margin against market downturns.
Common Expenses to Consider
When using the Monthly Expenses field in this calculator, ensure you sum up all recurring costs:
Property Taxes: Usually assessed annually; divide by 12.
Insurance: Landlord insurance policies.
Maintenance & Repairs: Rule of thumb is to set aside 5-10% of rent.
Vacancy: Account for periods where the unit is empty (e.g., 5% of rent).
Property Management: typically 8-10% of monthly rent if you hire a manager.