How Interest Rate Calculated in Bank

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Rental Property Cash Flow Calculator

Analyze the profitability and ROI of your next real estate investment

Property & Loan

Income & Expenses

Monthly Cash Flow
$0
Cap Rate
0%
Cash-on-Cash Return
0%

Annual Summary

Gross Annual Income: $0
Operating Expenses: $0
Annual Mortgage Payments: $0
Net Operating Income (NOI): $0

Understanding Rental Property Metrics

Investing in real estate requires more than just looking at the monthly rent. Professional investors use specific metrics to determine if a property is a "good deal." This calculator helps you break down the three most critical components of rental analysis.

1. Cash Flow

Cash flow is the net amount of cash moving into and out of your business. In rental terms, it's what remains after you've paid the mortgage, taxes, insurance, and set aside money for maintenance. Positive cash flow is essential for long-term sustainability.

2. Cap Rate (Capitalization Rate)

The Cap Rate is calculated by dividing the Net Operating Income (NOI) by the purchase price. It ignores the mortgage (financing) and shows the natural rate of return of the asset itself. It allows you to compare different properties regardless of how they are financed.

3. Cash-on-Cash (CoC) Return

CoC return measures the annual cash flow relative to the initial cash investment (down payment and closing costs). This is often the most important metric for investors using leverage, as it shows how hard your actual "out-of-pocket" dollars are working for you.

Example Calculation

Suppose you buy a property for $300,000 with a $60,000 down payment. If the monthly rent is $2,500 ($30,000/year) and your total operating expenses plus mortgage equal $2,200 per month, your monthly cash flow is $300. Your annual cash flow ($3,600) divided by your $60,000 investment results in a 6% Cash-on-Cash return.

function calculateRentalROI() { var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var downPayment = parseFloat(document.getElementById('downPayment').value); var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12; var loanTerm = parseFloat(document.getElementById('loanTerm').value) * 12; var monthlyRent = parseFloat(document.getElementById('monthlyRent').value); var annualTax = parseFloat(document.getElementById('annualTax').value); var annualInsurance = parseFloat(document.getElementById('annualInsurance').value); var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value) / 100; if (isNaN(purchasePrice) || isNaN(downPayment) || isNaN(monthlyRent)) { alert("Please enter valid numbers for purchase price, down payment, and rent."); return; } // Mortgage Calculation (PMT formula) var loanAmount = purchasePrice – downPayment; var monthlyMortgage = 0; if (interestRate > 0) { monthlyMortgage = loanAmount * (interestRate * Math.pow(1 + interestRate, loanTerm)) / (Math.pow(1 + interestRate, loanTerm) – 1); } else { monthlyMortgage = loanAmount / loanTerm; } // Operating Expenses var monthlyTax = annualTax / 12; var monthlyInsurance = annualInsurance / 12; var monthlyMaintenance = monthlyRent * maintenanceRate; var totalMonthlyExpenses = monthlyTax + monthlyInsurance + monthlyMaintenance; // NOI (Net Operating Income) var annualGrossIncome = monthlyRent * 12; var annualOperatingExpenses = totalMonthlyExpenses * 12; var annualNOI = annualGrossIncome – annualOperatingExpenses; // Cash Flow var monthlyCashFlow = (annualNOI / 12) – monthlyMortgage; var annualCashFlow = monthlyCashFlow * 12; // Ratios var capRate = (annualNOI / purchasePrice) * 100; var cashOnCash = (annualCashFlow / downPayment) * 100; // Display Results document.getElementById('resultsArea').style.display = 'block'; document.getElementById('resCashFlow').innerHTML = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%'; document.getElementById('resCoC').innerHTML = cashOnCash.toFixed(2) + '%'; document.getElementById('resGrossIncome').innerHTML = '$' + annualGrossIncome.toLocaleString(); document.getElementById('resOperatingExp').innerHTML = '$' + annualOperatingExpenses.toLocaleString(); document.getElementById('resAnnualMortgage').innerHTML = '$' + (monthlyMortgage * 12).toLocaleString(); document.getElementById('resNOI').innerHTML = '$' + annualNOI.toLocaleString(); // Color coding cash flow if (monthlyCashFlow < 0) { document.getElementById('resCashFlow').style.color = '#e74c3c'; } else { document.getElementById('resCashFlow').style.color = '#27ae60'; } }

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