Analyze the potential profitability of a real estate investment by calculating monthly cash flow and cash-on-cash return.
1. Purchase & Loan Details
2. Income & Expenses (Monthly)
Investment Analysis Results
Total Initial Investment (Down Payment + Closing Costs):–
Monthly Principal & Interest (Mortgage Payment):–
Total Monthly Operating Expenses (Taxes, Ins, Maint, etc.):–
Effective Monthly Gross Income (After Vacancy):–
Estimated Monthly Cash Flow:–
Estimated Annual Cash Flow:–
Cash-on-Cash Return:–
function calculateRentalCashFlow() {
// 1. Get Inputs and validate numbers
var price = parseFloat(document.getElementById('rpc_price').value);
var downPercent = parseFloat(document.getElementById('rpc_down_percent').value) / 100;
var closingPercent = parseFloat(document.getElementById('rpc_closing_percent').value) / 100;
var rate = parseFloat(document.getElementById('rpc_rate').value);
var termYears = parseFloat(document.getElementById('rpc_term').value);
var grossRent = parseFloat(document.getElementById('rpc_rent').value);
var vacancyRate = parseFloat(document.getElementById('rpc_vacancy').value) / 100;
var taxes = parseFloat(document.getElementById('rpc_taxes').value);
var insurance = parseFloat(document.getElementById('rpc_insurance').value);
var maintenanceRate = parseFloat(document.getElementById('rpc_maintenance').value) / 100;
var hoa = parseFloat(document.getElementById('rpc_hoa').value);
var otherExp = parseFloat(document.getElementById('rpc_other').value);
// Basic validation to prevent NaN errors if inputs are cleared
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(termYears) || isNaN(grossRent)) {
alert("Please ensure all required numeric fields are filled out correctly.");
return;
}
// 2. Perform Calculations
// Investment Costs
var downPaymentAmount = price * downPercent;
var closingCostsAmount = price * closingPercent;
var totalInitialInvestment = downPaymentAmount + closingCostsAmount;
// Loan Calculations
var loanAmount = price – downPaymentAmount;
var monthlyRate = (rate / 100) / 12;
var totalPayments = termYears * 12;
// Mortgage Payment (P&I) – Amortization Formula
var monthlyPI = 0;
if (loanAmount > 0 && monthlyRate > 0) {
monthlyPI = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else if (loanAmount > 0 && monthlyRate === 0) {
monthlyPI = loanAmount / totalPayments;
}
// Income Calculations
var vacancyLoss = grossRent * vacancyRate;
var effectiveGrossIncome = grossRent – vacancyLoss;
// Expense Calculations
var maintenanceCost = grossRent * maintenanceRate;
var totalOperatingExpenses = taxes + insurance + maintenanceCost + hoa + otherExp;
var totalMonthlyOutflow = monthlyPI + totalOperatingExpenses;
// Cash Flow Calculations
var monthlyCashFlow = effectiveGrossIncome – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// Return Calculation
var cashOnCashReturn = 0;
if (totalInitialInvestment > 0) {
cashOnCashReturn = (annualCashFlow / totalInitialInvestment) * 100;
}
// 3. Output Results with Formatting
var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
var percentFormatter = new Intl.NumberFormat('en-US', { style: 'percent', minimumFractionDigits: 2, maximumFractionDigits: 2 });
document.getElementById('rpc_result_investment').innerText = formatter.format(totalInitialInvestment);
document.getElementById('rpc_result_pi').innerText = formatter.format(monthlyPI);
document.getElementById('rpc_result_opex').innerText = formatter.format(totalOperatingExpenses);
document.getElementById('rpc_result_egi').innerText = formatter.format(effectiveGrossIncome);
var monthlyCfEl = document.getElementById('rpc_result_monthly_cf');
monthlyCfEl.innerText = formatter.format(monthlyCashFlow);
monthlyCfEl.className = monthlyCashFlow >= 0 ? 'rpc-metric positive' : 'rpc-metric negative';
var annualCfEl = document.getElementById('rpc_result_annual_cf');
annualCfEl.innerText = formatter.format(annualCashFlow);
annualCfEl.className = annualCashFlow >= 0 ? 'rpc-metric positive' : 'rpc-metric negative';
var cocEl = document.getElementById('rpc_result_coc');
cocEl.innerText = percentFormatter.format(cashOnCashReturn / 100);
cocEl.className = cashOnCashReturn >= 0 ? 'rpc-metric positive' : 'rpc-metric negative';
// Show results section
document.getElementById('rpc-results').style.display = 'block';
}
Understanding Rental Property Cash Flow
Successful real estate investing relies heavily on understanding the numbers. The most critical metric for buy-and-hold investors is cash flow—the net amount of cash moving in or out of an investment property each month.
Positive cash flow means the property's income exceeds all its expenses, putting money into your pocket every month. Negative cash flow means the property costs you money to keep, which is generally unsustainable in the long run unless you are banking solely on high appreciation.
How to Use This Cash Flow Calculator
This calculator breaks down the investment analysis into two main categories to give you an accurate picture of your potential returns.
1. Purchase & Loan Details
Purchase Price: The agreed-upon price of the property.
Down Payment (%): The percentage of the purchase price you are paying upfront in cash. The rest will be financed.
Est. Closing Costs (%): Often overlooked, these are fees associated with finalizing the loan and property transfer (e.g., title fees, loan origination). A typical range is 2% to 5% of the purchase price.
Loan Terms: The interest rate and the duration of the mortgage (e.g., 30 years) determine your monthly Principal & Interest (P&I) payment.
2. Monthly Income & Expenses
Accurately estimating these numbers is crucial for a realistic projection.
Gross Monthly Rent: The total rental income you expect the property to generate if fully occupied.
Vacancy Rate (%): Properties will not be occupied 100% of the time. You must account for turnover periods. A 5% to 8% vacancy rate is a common conservative estimate.
Operating Expenses: These include fixed costs like Property Taxes, Insurance, and HOA fees.
Maintenance/CapEx Rate (%): You must set aside a percentage of rent for ongoing repairs (maintenance) and major future replacements like a new roof or HVAC (Capital Expenditures or CapEx). Budgeting 10% to 15% total for these is prudent.
Interpreting Your Results
Monthly & Annual Cash Flow
This is your "take-home" money after the mortgage and all operating expenses are paid.
Formula: Effective Gross Income – (Operating Expenses + Mortgage Payment)
Cash-on-Cash Return (CoC)
This is perhaps the most important metric for comparing different investment opportunities. It measures the annual return you are making on the actual cash you invested (down payment + closing costs), rather than the total value of the property.
Formula: Annual Pre-Tax Cash Flow / Total Initial Cash Invested
Example Scenario
Imagine you buy a property for $250,000. You put 20% down ($50,000) and pay 3% in closing costs ($7,500), for a total cash investment of $57,500. You secure a 30-year loan at 6.5% interest.
You rent it for $2,200 per month. After accounting for a 5% vacancy rate, taxes, insurance, and setting aside 10% for maintenance, your total monthly outflows (including the mortgage) might be around $2,050.
In this scenario, your positive monthly cash flow would be approximately $150. This results in an annual cash flow of $1,800. Your Cash-on-Cash return would be $1,800 divided by your initial $57,500 investment, equaling roughly a 3.13% return.