Rental Property Cash Flow Calculator
Property Details
Expenses (Estimates)
Monthly Cash Flow Analysis
Gross Rent:
$2,200.00
Principal & Interest:
-$1,264.14
Operating Expenses:
-$570.00
Net Monthly Cash Flow:
$365.86
Investment Metrics
Net Operating Income (Annual):
$19,560.00
Cap Rate:
7.82%
Cash on Cash Return:
8.78%
Total Cash Invested:
$50,000.00
Understanding Rental Property Metrics
Investing in real estate requires precise calculations to ensure a property will generate income rather than drain your bank account. This Rental Property Cash Flow Calculator helps investors analyze potential deals by breaking down income, operating expenses, and debt service.
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of a business. In real estate, it is calculated as:
Cash Flow = Gross Rental Income – (Operating Expenses + Mortgage Payments)
Cash flow is the net amount of cash moving into and out of a business. In real estate, it is calculated as:
Cash Flow = Gross Rental Income – (Operating Expenses + Mortgage Payments)
Key Metrics Explained
- NOI (Net Operating Income): The annual income generated by the property after deducting all operating expenses (vacancy, taxes, insurance, repairs) but before deducting mortgage payments. It measures the profitability of the property itself.
- Cap Rate (Capitalization Rate): Calculated as
NOI / Purchase Price. It represents the natural rate of return on the property if you bought it in all cash. A higher cap rate generally indicates a better return, though often with higher risk. - Cash on Cash (CoC) Return: Calculated as
Annual Cash Flow / Total Cash Invested. This is the true return on the actual money you put into the deal (down payment + closing costs + rehab).
Example Scenario
Let's say you are looking at a single-family home listed for $200,000. You plan to put 20% down ($40,000).
If the property rents for $1,800/month, and your total monthly expenses (mortgage, taxes, insurance, repairs) come out to $1,500/month, your positive cash flow is $300/month.
Your annual cash flow would be $3,600. Dividing this by your initial investment of $40,000 gives you a 9% Cash on Cash return.
Why Factor in Vacancy and Maintenance?
Novice investors often make the mistake of assuming 100% occupancy and zero repairs. However, tenants move out, and water heaters break. A conservative analysis typically includes:
- Vacancy Rate: 5-8% (approx. 2-3 weeks of emptiness per year).
- Maintenance: 5-10% of monthly rent set aside for future repairs.
- Capital Expenditures (CapEx): Setting aside funds for big-ticket items like roof replacement (often bundled with maintenance in simple calculators).