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 popular ways to build wealth, but the success of an investment typically hinges on one critical metric: Cash Flow. This calculator is designed to help investors analyze a potential rental property deal to determine if it will generate income (positive cash flow) or cost money to hold (negative cash flow).
How the Calculator Works
To get an accurate picture of your investment, you need to account for more than just the mortgage payment. This tool breaks down your expenses into three categories:
- Debt Service: The principal and interest payments on your loan.
- Fixed Expenses: Recurring costs like property taxes and insurance.
- Variable Expenses: Costs that fluctuate or are estimated percentages of rent, such as vacancy reserves, maintenance funds, and property management fees.
Key Metrics Explained
1. Monthly Cash Flow
This is the profit you take home every month after all expenses and mortgage payments are made.
Formula: Total Rental Income – (Operating Expenses + Mortgage Payment)
2. Net Operating Income (NOI)
NOI is a measure of the profitability of the property before factoring in financing costs (mortgage). It helps you compare the performance of properties regardless of how they are financed.
Formula: Income – Operating Expenses (excluding mortgage)
3. Cash on Cash Return (CoC)
This percentage tells you how hard your actual invested cash is working for you. It compares your annual cash flow to the total cash invested (down payment). A CoC of 8-12% is often considered a solid benchmark for rental properties.
Formula: (Annual Cash Flow / Total Cash Invested) × 100
4. Cap Rate (Capitalization Rate)
The Cap Rate indicates the rate of return on the property based on the income it generates, assuming you bought it with cash. It measures the property's natural profitability.
Formula: (Annual NOI / Purchase Price) × 100
Why Include Vacancy and Maintenance?
Novice investors often make the mistake of calculating cash flow using only rent minus the mortgage. However, properties require upkeep, and tenants occasionally move out. By setting aside 5-10% for maintenance and 5-8% for vacancy, you protect yourself from unexpected cash flow crunches when a water heater breaks or a unit sits empty for a month.
function calculateCashFlow() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPercent = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var termYears = parseFloat(document.getElementById('loanTerm').value) || 0;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var yearlyTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var yearlyIns = parseFloat(document.getElementById('insurance').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('vacancy').value) || 0;
var mgmtPercent = parseFloat(document.getElementById('managementFee').value) || 0;
// 2. Calculate Loan Details
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyInterestRate = (interestRate / 100) / 12;
var totalPayments = termYears * 12;
// Mortgage Calculation
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalPayments)) / (Math.pow(1 + monthlyInterestRate, totalPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
monthlyMortgage = loanAmount / totalPayments;
}
// 3. Calculate Monthly Operating Expenses
var monthlyTax = yearlyTax / 12;
var monthlyIns = yearlyIns / 12;
var monthlyMaint = monthlyRent * (maintPercent / 100);
var monthlyVacancy = monthlyRent * (vacancyPercent / 100);
var monthlyMgmt = monthlyRent * (mgmtPercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyIns + monthlyMaint + monthlyVacancy + monthlyMgmt;
var totalExpensesWithMortgage = totalOperatingExpenses + monthlyMortgage;
// 4. Calculate Key Metrics
var monthlyCashFlow = monthlyRent – totalExpensesWithMortgage;
var monthlyNOI = monthlyRent – totalOperatingExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = monthlyNOI * 12;
// Cash on Cash Return
// Assuming Total Cash Invested is just Down Payment for this scope (could include closing costs)
var cashOnCash = 0;
if (downPaymentAmount > 0) {
cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
}
// Cap Rate
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 5. Display Results
document.getElementById('resMortgage').innerText = "$" + monthlyMortgage.toFixed(2);
document.getElementById('resTotalExp').innerText = "$" + totalExpensesWithMortgage.toFixed(2);
document.getElementById('resNOI').innerText = "$" + monthlyNOI.toFixed(2);
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerText = "$" + monthlyCashFlow.toFixed(2);
cashFlowEl.style.color = monthlyCashFlow >= 0 ? "#2e7d32" : "#c62828"; // Green if pos, Red if neg
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cashOnCash.toFixed(2) + "%";
cocEl.style.color = cashOnCash >= 0 ? "#2e7d32" : "#c62828";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
// Show results
document.getElementById('results-area').style.display = "grid";
}