Analyze the profitability of your real estate investment.
Gross Monthly Income:$0.00
Total Monthly Expenses:$0.00
Net Operating Income (Monthly):$0.00
Mortgage Payment (P&I):$0.00
Monthly Cash Flow:$0.00
Annual Cash Flow:$0.00
Cash on Cash Return:$0.00%
Cap Rate:$0.00%
Understanding Rental Property Cash Flow
Calculating cash flow is the most critical step in evaluating a rental property investment. Positive cash flow ensures that the property generates enough income to cover all expenses, including the mortgage, taxes, insurance, and maintenance, while providing a profit for the investor.
Key Metrics Explained
Net Operating Income (NOI): This is your total income minus operating expenses, excluding the mortgage payment. It measures the profitability of the property itself, regardless of financing.
Cash Flow: The net amount of cash moving in or out of the investment each month. It is calculated as NOI minus debt service (mortgage payments).
Cash on Cash Return: A percentage return on the actual cash invested (down payment + closing costs). It's a powerful metric to compare real estate against other investment vehicles like stocks.
Cap Rate: Calculated by dividing NOI by the property's purchase price. It represents the potential return on investment if you bought the property with all cash.
How to Improve Your Cash Flow
If your calculation shows negative or low cash flow, consider these strategies:
Increase Rent: Research local market rates to ensure you aren't undercharging.
Reduce Vacancy: Improve property appeal or tenant retention to lower the vacancy rate inputs.
Refinance: Securing a lower interest rate or extending the loan term can significantly reduce monthly mortgage payments.
Is a Rental Property a Good Investment?
Generally, investors look for a positive cash flow of at least $100-$200 per door per month. However, this varies by market. A "good" Cash on Cash return is typically considered to be between 8% and 12%, though in high-appreciation markets, investors may accept lower immediate returns.
function calculateCashFlow() {
// 1. Get Inputs
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var annualTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var annualInsurance = parseFloat(document.getElementById('insurance').value) || 0;
var hoaFees = parseFloat(document.getElementById('hoaFees').value) || 0;
var maintenance = parseFloat(document.getElementById('maintenance').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var managementFeePct = parseFloat(document.getElementById('managementFee').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTermYears = parseFloat(document.getElementById('loanTerm').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
// 2. Calculate Mortgage
var loanAmount = purchasePrice – downPayment;
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0 && loanTermYears > 0) {
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 3. Calculate Monthly Operating Expenses
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var vacancyCost = monthlyRent * (vacancyRate / 100);
var managementCost = monthlyRent * (managementFeePct / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + hoaFees + maintenance + vacancyCost + managementCost;
// 4. Calculate Key Metrics
var effectiveGrossIncome = monthlyRent – vacancyCost; // Often vacancy is subtracted from income
// However for simplified display, we treat vacancy as an expense or reduction.
// Standard NOI formula: Gross Income – Operating Expenses.
// We included vacancy cost in "totalOperatingExpenses" above.
var noi = monthlyRent – totalOperatingExpenses;
var monthlyCashFlow = noi – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = noi * 12;
var totalCashInvested = downPayment + closingCosts;
var cashOnCashReturn = 0;
if (totalCashInvested > 0) {
cashOnCashReturn = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// 5. Update UI
document.getElementById('rpcResults').style.display = 'block';
// Helper for currency formatting
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
var fmtPct = new Intl.NumberFormat('en-US', { style: 'decimal', minimumFractionDigits: 2, maximumFractionDigits: 2 });
document.getElementById('resGrossIncome').innerText = fmt.format(monthlyRent);
// Total expenses displayed should include everything except mortgage
document.getElementById('resTotalExpenses').innerText = fmt.format(totalOperatingExpenses);
document.getElementById('resNOI').innerText = fmt.format(noi);
document.getElementById('resMortgage').innerText = fmt.format(monthlyMortgage);
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = fmt.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfElement.className = "rpc-result-value rpc-highlight";
} else {
cfElement.className = "rpc-result-value rpc-negative";
}
document.getElementById('resAnnualCashFlow').innerText = fmt.format(annualCashFlow);
document.getElementById('resCoC').innerText = fmtPct.format(cashOnCashReturn) + "%";
document.getElementById('resCapRate').innerText = fmtPct.format(capRate) + "%";
}