Investing in real estate requires precise calculations to ensure profitability. This Rental Property Cash Flow Calculator helps investors determine the viability of a potential investment by analyzing key metrics like Cash on Cash Return, Cap Rate, and monthly cash flow.
Key Metrics Explained
Cash Flow: The net amount of cash moving into or out of your investment each month. Positive cash flow means the property generates income after all expenses (mortgage, taxes, insurance, repairs) are paid.
Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment + closing costs). It is a critical metric for understanding the efficiency of your deployed capital.
Cap Rate (Capitalization Rate): This percentage represents the rate of return on a real estate investment property based on the income that the property is expected to generate, excluding mortgage financing. It helps compare properties regardless of how they are financed.
Net Operating Income (NOI): The annual income generated by the property after deducting all operating expenses but before deducting mortgage payments or taxes.
How to Improve Rental Cash Flow
If your calculation shows negative or low cash flow, consider these strategies:
Increase Rent: ensure your rental rates match current market value.
Reduce Operating Expenses: Shop around for cheaper insurance or handle minor maintenance yourself.
Increase Down Payment: Putting more money down reduces the loan amount and monthly mortgage payment, instantly boosting cash flow.
Minimize Vacancy: A high vacancy rate kills returns. Screen tenants well to ensure long-term occupancy.
Frequently Asked Questions
What is a good Cash on Cash return for rental property?
While targets vary by investor and market, a Cash on Cash return of 8-12% is generally considered solid for long-term residential rentals. Some aggressive investors look for 15%+, while those in high-appreciation markets might accept 4-6%.
Does Cap Rate include mortgage payments?
No. Cap Rate is calculated using Net Operating Income (NOI), which excludes debt service (mortgage payments). This allows investors to evaluate the profitability of the property itself, separate from financing decisions.
function calculateRentalCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('rpPrice').value);
var downPercent = parseFloat(document.getElementById('rpDownPercent').value);
var interestRate = parseFloat(document.getElementById('rpInterest').value);
var termYears = parseFloat(document.getElementById('rpTerm').value);
var closingCosts = parseFloat(document.getElementById('rpClosingCosts').value);
var monthlyRent = parseFloat(document.getElementById('rpRent').value);
var monthlyExpenses = parseFloat(document.getElementById('rpExpenses').value);
var vacancyRate = parseFloat(document.getElementById('rpVacancy').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(interestRate) || isNaN(termYears) || isNaN(monthlyRent)) {
alert("Please enter valid numbers for all required fields.");
return;
}
// 2. Core Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var totalCashInvested = downPaymentAmount + closingCosts;
// Mortgage Payment (P&I)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
var monthlyMortgage = 0;
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Effective Income (accounting for vacancy)
var vacancyLoss = monthlyRent * (vacancyRate / 100);
var effectiveMonthlyRent = monthlyRent – vacancyLoss;
// Cash Flow
var totalMonthlyOutflow = monthlyMortgage + monthlyExpenses;
var monthlyCashFlow = effectiveMonthlyRent – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// NOI (Net Operating Income) = (Effective Rent – Operating Expenses) * 12 (Exclude Mortgage)
var annualNOI = (effectiveMonthlyRent – monthlyExpenses) * 12;
// Cap Rate = (Annual NOI / Purchase Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// 3. Display Results
document.getElementById('resMortgage').innerText = "$" + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if(monthlyCashFlow >= 0) {
cfElement.className = "rp-result-value rp-cashflow-positive";
} else {
cfElement.className = "rp-result-value rp-cashflow-negative";
}
document.getElementById('resNOI').innerText = "$" + annualNOI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
var cocElement = document.getElementById('resCoC');
cocElement.innerText = cocReturn.toFixed(2) + "%";
if(cocReturn >= 0) {
cocElement.className = "rp-result-value rp-cashflow-positive";
} else {
cocElement.className = "rp-result-value rp-cashflow-negative";
}
// Show result div
document.getElementById('rpResults').style.display = 'block';
}