Property Details
Financing
30 Years
20 Years
15 Years
Expenses (Yearly / Monthly)
Monthly Cash Flow
$0.00
Cash on Cash Return (ROI)
0.00%
Cap Rate
0.00%
Total Monthly Income
$0.00
Total Monthly Expenses
$0.00
Mortgage Payment (P&I)
$0.00
Operating Expenses
$0.00
Total Cash Invested
$0.00
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. Successful real estate investors rely on Cash Flow Analysis to determine if a specific property is a viable investment.
This calculator breaks down the income and expenses associated with a potential rental property to provide key performance metrics like Cash Flow, Cash on Cash Return, and Cap Rate.
What is Monthly Cash Flow?
Cash flow is the profit remaining after all expenses have been paid. It is calculated as:
Cash Flow = Total Income – Total Expenses
Positive cash flow means the property pays for itself and puts money in your pocket every month. Negative cash flow implies the property costs you money to hold, which is generally risky for long-term investors.
Key Metrics Explained
- Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (Down Payment + Closing Costs). A CoC return of 8-12% is often considered a solid benchmark for rental properties.
- Cap Rate (Capitalization Rate): This metric evaluates the profitability of an investment regardless of financing. It is calculated by dividing Net Operating Income (NOI) by the Purchase Price. It helps compare properties apples-to-apples without loan variables.
- Net Operating Income (NOI): The total income minus operating expenses (excluding mortgage payments).
How to Use the 1% Rule
A quick rule of thumb used by investors is the 1% Rule. It states that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month. While not a hard rule, it serves as a quick filter to find properties that are likely to generate positive cash flow.