Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good deal. To ensure profitability, investors must accurately calculate cash flow, Cash-on-Cash (CoC) return, and Capitalization Rate (Cap Rate). This calculator breaks down the complex math into actionable insights.
What is Positive Cash Flow?
Positive cash flow occurs when a rental property's gross monthly income exceeds all of its operational expenses and debt service payments. This surplus capital is what ends up in your pocket every month.
The basic formula is: Gross Rent – (Mortgage + Taxes + Insurance + HOA + Maintenance + Vacancy + Management) = Cash Flow
Key Metrics Explained
NOI (Net Operating Income): This is the annual income generated by the property after deducting all operating expenses (like taxes, insurance, and repairs) but before deducting mortgage payments. It measures the raw profitability of the asset itself.
Cap Rate: Calculated as (NOI / Purchase Price) × 100. This metric helps compare the return on investment of different properties assuming they were bought with cash. A higher Cap Rate generally indicates a better return, though often comes with higher risk.
Cash-on-Cash Return: This measures the return on the actual cash you invested (down payment + closing costs). It is calculated as (Annual Cash Flow / Total Cash Invested) × 100. This is often considered the most important metric for leveraged investors.
Estimating Variable Expenses
Many new investors fail because they underestimate "hidden" costs. Our calculator includes fields for:
Vacancy Rate: Properties won't be rented 365 days a year. A standard safe estimate is 5-8%.
Maintenance/CapEx: Setting aside 5-10% of rent for future repairs (roof, HVAC, painting) is critical for long-term sustainability.
Property Management: Even if you self-manage now, factoring in 8-10% ensures the deal still works if you hire a manager later.
The 1% Rule
A common "rule of thumb" in real estate is the 1% rule, which states that the monthly rent should be at least 1% of the purchase price. While this rule is harder to meet in expensive markets, it serves as a quick filter to identify potential cash-flowing properties before running a full analysis.
function calculateCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('rp_price').value);
var downPercent = parseFloat(document.getElementById('rp_down_percent').value);
var interestRate = parseFloat(document.getElementById('rp_interest').value);
var termYears = parseFloat(document.getElementById('rp_term').value);
var closingCosts = parseFloat(document.getElementById('rp_closing_costs').value);
var rent = parseFloat(document.getElementById('rp_rent').value);
var hoa = parseFloat(document.getElementById('rp_hoa').value);
var annualTax = parseFloat(document.getElementById('rp_tax').value);
var annualIns = parseFloat(document.getElementById('rp_insurance').value);
var repairPercent = parseFloat(document.getElementById('rp_repair').value);
var vacancyPercent = parseFloat(document.getElementById('rp_vacancy').value);
var mgmtPercent = parseFloat(document.getElementById('rp_mgmt').value);
// 2. Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(interestRate) || isNaN(termYears) || isNaN(rent) || isNaN(annualTax) || isNaN(annualIns)) {
document.getElementById('rp_error_msg').style.display = 'block';
document.getElementById('rp_results').style.display = 'none';
return;
} else {
document.getElementById('rp_error_msg').style.display = 'none';
}
// Handle optional fields defaults if empty/NaN (though validation above catches strict NaNs, these are percentages that could be 0)
if (isNaN(closingCosts)) closingCosts = 0;
if (isNaN(hoa)) hoa = 0;
if (isNaN(repairPercent)) repairPercent = 0;
if (isNaN(vacancyPercent)) vacancyPercent = 0;
if (isNaN(mgmtPercent)) mgmtPercent = 0;
// 3. Loan Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var numPayments = termYears * 12;
// Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
monthlyMortgage = loanAmount / numPayments;
}
// 4. Monthly Expenses Calculation
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var monthlyRepair = rent * (repairPercent / 100);
var monthlyVacancy = rent * (vacancyPercent / 100);
var monthlyMgmt = rent * (mgmtPercent / 100);
// Grouping for display
var otherExpenses = hoa + monthlyRepair + monthlyVacancy + monthlyMgmt;
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + otherExpenses;
// 5. Returns Calculation
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// NOI = Annual Rent – Operating Expenses (No Mortgage)
// Operating Expenses = Tax + Ins + HOA + Repair + Vacancy + Mgmt
var annualOperatingExpenses = (monthlyTax + monthlyIns + otherExpenses) * 12;
var annualNOI = (rent * 12) – annualOperatingExpenses;
// Cap Rate = (NOI / Purchase Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash = (Annual Cash Flow / Total Cash Invested) * 100
var totalCashInvested = downPaymentAmount + closingCosts;
var cocReturn = (annualCashFlow / totalCashInvested) * 100;
// 6. Update UI
document.getElementById('res_mortgage').innerText = "$" + formatNumber(monthlyMortgage);
document.getElementById('res_tax').innerText = "$" + formatNumber(monthlyTax);
document.getElementById('res_ins').innerText = "$" + formatNumber(monthlyIns);
document.getElementById('res_other_exp').innerText = "$" + formatNumber(otherExpenses);
document.getElementById('res_total_exp').innerText = "$" + formatNumber(totalMonthlyExpenses);
var flowElem = document.getElementById('res_cashflow');
flowElem.innerText = "$" + formatNumber(monthlyCashFlow);
flowElem.style.color = monthlyCashFlow >= 0 ? "#27ae60" : "#c0392b";
document.getElementById('res_coc').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('res_cap').innerText = capRate.toFixed(2) + "%";
document.getElementById('res_noi').innerText = "$" + formatNumber(annualNOI);
document.getElementById('rp_results').style.display = 'block';
}
function formatNumber(num) {
return num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}