function calculateCashFlow() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('rpc_price').value);
var downPayment = parseFloat(document.getElementById('rpc_down').value);
var rate = parseFloat(document.getElementById('rpc_rate').value);
var term = parseFloat(document.getElementById('rpc_term').value);
var rent = parseFloat(document.getElementById('rpc_rent').value);
var expenses = parseFloat(document.getElementById('rpc_expenses').value);
// 2. Validation
if (isNaN(price) || isNaN(downPayment) || isNaN(rate) || isNaN(term) || isNaN(rent) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (downPayment > price) {
alert("Down payment cannot be greater than the purchase price.");
return;
}
// 3. Calculation Logic
var loanAmount = price – downPayment;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
// Mortgage Calculation Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyMortgage = 0;
if (monthlyRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
var totalMonthlyExpenses = monthlyMortgage + expenses;
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested
// For simplicity, we assume Total Cash Invested = Down Payment (ignoring closing costs for this basic tool)
var cashOnCash = 0;
if (downPayment > 0) {
cashOnCash = (annualCashFlow / downPayment) * 100;
}
// 4. Update UI
document.getElementById('rpc_result_box').style.display = 'block';
document.getElementById('rpc_res_mortgage').innerHTML = "$" + monthlyMortgage.toFixed(2);
document.getElementById('rpc_res_total_exp').innerHTML = "$" + totalMonthlyExpenses.toFixed(2);
var cfElement = document.getElementById('rpc_res_cashflow');
cfElement.innerHTML = "$" + monthlyCashFlow.toFixed(2);
cfElement.className = "rpc-result-value " + (monthlyCashFlow >= 0 ? "rpc-positive" : "rpc-negative");
var annualCfElement = document.getElementById('rpc_res_annual_cf');
annualCfElement.innerHTML = "$" + annualCashFlow.toFixed(2);
annualCfElement.className = "rpc-result-value " + (annualCashFlow >= 0 ? "rpc-positive" : "rpc-negative");
var cocElement = document.getElementById('rpc_res_coc');
cocElement.innerHTML = cashOnCash.toFixed(2) + "%";
cocElement.className = "rpc-result-value " + (cashOnCash >= 0 ? "rpc-positive" : "rpc-negative");
}
Understanding Rental Property Cash Flow
Calculating cash flow is the most critical step in evaluating a potential rental property investment. Positive cash flow ensures that the property pays for itself while generating income for the owner, whereas negative cash flow implies a monthly loss that must be covered out-of-pocket.
How This Calculator Works
This Rental Property Cash Flow Calculator takes into account the primary financial drivers of a real estate deal to determine your profitability:
Purchase Price & Down Payment: Determines the initial equity and the size of the loan required.
Interest Rate & Term: Used to calculate the monthly principal and interest (mortgage) payment.
Rental Income: The gross revenue generated by the property.
Operating Expenses: These include property taxes, insurance, maintenance reserves, property management fees, and vacancy allowances.
Key Metrics Explained
Monthly Cash Flow: This is your "net profit" at the end of every month. It is calculated by subtracting the total monthly expenses (mortgage + operating costs) from the monthly rental income. Investors generally seek properties that yield at least $100-$300 per door in net positive cash flow.
Cash on Cash Return (CoC): This metric measures the annual return on the actual cash invested (down payment). Unlike pure ROI, it compares the annual cash flow specifically to the cash used to acquire the property. A generic benchmark for a good CoC return is often considered to be between 8% and 12%, though this varies by market.
Why is Cash Flow Important?
While appreciation (the increase in property value over time) is a wealth generator, cash flow is what keeps a business solvent. Investing in positive cash flow properties provides a buffer against market downturns, as the rental income continues to cover debt service and expenses regardless of the property's fluctuating market value.