Rental Property Cash Flow Calculator
Monthly Mortgage (P&I):
$0.00
Operating Expenses:
$0.00
Effective Gross Income:
$0.00
Monthly Cash Flow:
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Cash-on-Cash Return:
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How to Calculate Rental Property Cash Flow
Cash flow is the lifeblood of real estate investing. It is the net amount of cash moving into and out of an investment property each month after all operating expenses and mortgage payments have been covered. Understanding your cash flow helps you determine if a property is an asset or a liability.
The Core Formula
To find your monthly cash flow, follow this logic:
- Gross Potential Income: Total rent you could collect if the unit is occupied.
- Effective Gross Income: Gross income minus the vacancy allowance.
- Operating Expenses: Property taxes, insurance, repairs, management fees, and utilities.
- Net Operating Income (NOI): Effective Gross Income minus Operating Expenses.
- Cash Flow: NOI minus Monthly Mortgage Payments (Debt Service).
What is a Good Cash Flow?
Most real estate investors look for a "positive cash flow" property, meaning the income exceeds all costs. A common benchmark is the 1% Rule, which suggests that a property should rent for at least 1% of its purchase price. However, in high-priced markets, investors often focus on the Cash-on-Cash Return, aiming for 8% to 12% annually on the actual money invested (down payment and closing costs).
Realistic Example
Imagine purchasing a duplex for $300,000 with 20% down ($60,000). At a 7% interest rate, your mortgage might be around $1,600. If the total rent is $3,200, and you set aside $800 for taxes, insurance, and maintenance, your cash flow would be approximately $800 per month ($3,200 – $1,600 – $800). This results in an annual cash flow of $9,600, which is a 16% Cash-on-Cash return on your $60,000 investment.
Key Expense Categories to Include
Many new landlords fail to account for "hidden" costs. When using the calculator, ensure you include:
- Capital Expenditures (CapEx): Savings for big-ticket items like a new roof or HVAC.
- Property Management: Even if you manage it yourself, budgeting 8-10% ensures the investment is viable if you ever hire help.
- Vacancy: Budgeting 5-8% accounts for the weeks between tenants.