Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must understand the numbers behind the deal. This Rental Property Cash Flow Calculator helps you determine if a potential investment will generate positive income or drain your savings.
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of your rental business. Positive cash flow occurs when your property's Gross Rental Income exceeds the total of your mortgage payments and operating expenses (taxes, insurance, maintenance, HOA fees). Positive cash flow is crucial for long-term sustainability, as it provides a buffer against vacancies and major repairs.
Two primary metrics are used to evaluate rental performance:
Cap Rate (Capitalization Rate): This measures the property's natural rate of return without considering financing. It is calculated by dividing the Net Operating Income (NOI) by the property's purchase price. A higher cap rate generally indicates a better return, though it may come with higher risk.
Cash on Cash Return: This is arguably the most important metric for leveraged investors. It measures the annual cash income earned on the cash actually invested (down payment + closing costs). It answers the question: "What percentage return am I making on the money I put down?"
How to Improve Your ROI
If the calculator shows a negative cash flow or a low return, consider these strategies: negotiate a lower purchase price to reduce your mortgage, look for properties in areas with higher rent-to-price ratios, or increase the down payment to lower monthly debt service. Additionally, accurate estimation of "hidden" costs like vacancy rates (typically 5-10%) and maintenance reserves is vital for a realistic projection.
function calculateRentalROI() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('rp_price').value);
var downPercent = parseFloat(document.getElementById('rp_down').value);
var interestRate = parseFloat(document.getElementById('rp_rate').value);
var years = parseFloat(document.getElementById('rp_term').value);
var monthlyRent = parseFloat(document.getElementById('rp_rent').value);
var taxIns = parseFloat(document.getElementById('rp_tax_ins').value);
var hoa = parseFloat(document.getElementById('rp_hoa').value);
var maint = parseFloat(document.getElementById('rp_maint').value);
// Validate Inputs
if (isNaN(price) || isNaN(downPercent) || isNaN(interestRate) || isNaN(years) || isNaN(monthlyRent)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
// handle empty optional fields
if (isNaN(taxIns)) taxIns = 0;
if (isNaN(hoa)) hoa = 0;
if (isNaN(maint)) maint = 0;
// 2. Perform Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
// Mortgage Calculation (Monthly PI)
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = years * 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);
}
// Operating Expenses
var monthlyOpEx = taxIns + hoa + maint;
var totalMonthlyExpenses = monthlyMortgage + monthlyOpEx;
// Cash Flow
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI) = Annual Rent – Annual OpEx (excluding mortgage)
var annualNOI = (monthlyRent * 12) – (monthlyOpEx * 12);
// Cap Rate = (Annual NOI / Purchase Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
// Note: Ideally Total Cash Invested includes closing costs/repairs.
// For this simple calc, we use Down Payment.
var cashOnCash = 0;
if (downPaymentAmount > 0) {
cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
}
// 3. Update UI
var resBox = document.getElementById('rp_result_box');
resBox.style.display = "block";
// Format Currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('res_mortgage').innerText = fmt.format(monthlyMortgage);
document.getElementById('res_expenses').innerText = fmt.format(totalMonthlyExpenses);
document.getElementById('res_noi').innerText = fmt.format(annualNOI);
// Handle coloring for Cash Flow
var cfElement = document.getElementById('res_monthly_cf');
cfElement.innerText = fmt.format(monthlyCashFlow);
cfElement.className = "rp-result-value " + (monthlyCashFlow >= 0 ? "positive" : "negative");
document.getElementById('res_coc').innerText = cashOnCash.toFixed(2) + "%";
document.getElementById('res_cap').innerText = capRate.toFixed(2) + "%";
}