Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee profit. The most critical metric for buy-and-hold investors is Cash Flow. This calculator helps you determine if a potential rental property is an asset that puts money in your pocket or a liability that takes it out.
How the Calculations Work
To accurately assess a rental property deal, we look at several key metrics generated by the calculator above:
Net Operating Income (NOI): This is your total income minus operating expenses (Taxes, Insurance, HOA, Maintenance), excluding mortgage payments. It measures the property's profitability before debt service.
Cash Flow: This is the net amount left over after all expenses and the mortgage payment are made. Positive cash flow means the tenant is paying off your asset while providing you with monthly income.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price. This percentage allows you to compare the profitability of the property against other investments, regardless of how it is financed.
Cash on Cash Return (CoC): This measures the return on the actual cash you invested (Down Payment + Closing Costs). A 10% CoC means you earn back 10% of your invested capital per year in cash flow.
Estimating Expenses Correctly
Many new investors make the mistake of underestimating expenses. Beyond the obvious mortgage, tax, and insurance, ensure you account for:
Vacancy & Maintenance: We recommend setting aside at least 10% of monthly rent (as shown in the calculator input) to cover months where the unit is empty or when the water heater breaks.
Closing Costs: Don't forget the upfront cash required to close the deal, as this affects your Cash on Cash return significantly.
Use this tool to analyze multiple scenarios. Try adjusting the rent price or the down payment amount to see how it impacts your bottom line and ROI.
function calculateRentalCashFlow() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var downPaymentPercent = parseFloat(document.getElementById("downPaymentPercent").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var annualTax = parseFloat(document.getElementById("annualTax").value);
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value);
var monthlyHOA = parseFloat(document.getElementById("monthlyHOA").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var closingCosts = parseFloat(document.getElementById("closingCosts").value);
// Validation to prevent NaN errors
if (isNaN(purchasePrice) || isNaN(monthlyRent)) {
alert("Please ensure Purchase Price and Monthly Rent are valid numbers.");
return;
}
// Handle empty fields as 0
if (isNaN(monthlyHOA)) monthlyHOA = 0;
if (isNaN(closingCosts)) closingCosts = 0;
if (isNaN(vacancyRate)) vacancyRate = 0;
// 2. Loan Calculations
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (interestRate > 0) {
// Standard Mortgage Formula
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
// 0% Interest edge case
monthlyMortgage = loanAmount / totalPayments;
}
// 3. Expense Calculations
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var monthlyVacancyMaintenance = monthlyRent * (vacancyRate / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyHOA + monthlyVacancyMaintenance;
var totalMonthlyOutflow = totalOperatingExpenses + monthlyMortgage;
// 4. ROI Calculations
var monthlyCashFlow = monthlyRent – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (Annual) = (Gross Income – Operating Expenses) * 12. Excludes Debt Service.
var annualNOI = (monthlyRent – totalOperatingExpenses) * 12;
// Cap Rate = Annual NOI / Purchase Price
var capRate = (annualNOI / purchasePrice) * 100;
// Cash on Cash = Annual Cash Flow / Total Cash Invested
var totalCashInvested = downPaymentAmount + closingCosts;
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
// 5. Display Results
document.getElementById("resultsSection").style.display = "block";
document.getElementById("displayMortgage").innerHTML = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("displayTotalExpenses").innerHTML = "$" + totalMonthlyOutflow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById("displayMonthlyCashFlow");
cashFlowEl.innerHTML = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
cashFlowEl.style.color = monthlyCashFlow >= 0 ? "#2c7a7b" : "#e53e3e"; // Green if positive, Red if negative
document.getElementById("displayAnnualCashFlow").innerHTML = "$" + annualCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("displayNOI").innerHTML = "$" + annualNOI.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("displayCapRate").innerHTML = capRate.toFixed(2) + "%";
var cocEl = document.getElementById("displayCoC");
cocEl.innerHTML = cashOnCash.toFixed(2) + "%";
cocEl.style.color = cashOnCash >= 0 ? "#2c7a7b" : "#e53e3e";
}