function calculateCashFlow() {
// Get Inputs
var price = parseFloat(document.getElementById('rpPrice').value);
var downPercent = parseFloat(document.getElementById('rpDown').value);
var rate = parseFloat(document.getElementById('rpRate').value);
var term = parseFloat(document.getElementById('rpTerm').value);
var rent = parseFloat(document.getElementById('rpRent').value);
var tax = parseFloat(document.getElementById('rpTax').value);
var insurance = parseFloat(document.getElementById('rpIns').value);
var hoa = parseFloat(document.getElementById('rpHoa').value);
var maintPercent = parseFloat(document.getElementById('rpMaint').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(term) || isNaN(rent)) {
alert("Please enter valid numbers for all fields.");
return;
}
// 1. Calculate Mortgage
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (rate / 100) / 12;
var numPayments = term * 12;
var mortgagePayment = 0;
if (monthlyRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
mortgagePayment = loanAmount / numPayments;
}
// 2. Calculate Expenses
var vacancyMaintCost = rent * (maintPercent / 100);
var operatingExpenses = tax + insurance + hoa + vacancyMaintCost;
var totalMonthlyExpenses = operatingExpenses + mortgagePayment;
// 3. Calculate NOI (Net Operating Income)
var noi = rent – operatingExpenses;
// 4. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate Cash on Cash Return
// Cash Invested = Down Payment. (Simplified, ignoring closing costs for basic input)
var cashInvested = downPaymentAmount;
var cocReturn = 0;
if (cashInvested > 0) {
cocReturn = (annualCashFlow / cashInvested) * 100;
}
// Display Results
document.getElementById('resCashFlow').innerHTML = formatCurrency(monthlyCashFlow);
document.getElementById('resCashFlow').className = 'rp-result-value ' + (monthlyCashFlow >= 0 ? 'positive' : 'negative');
document.getElementById('resCoc').innerHTML = cocReturn.toFixed(2) + "%";
document.getElementById('resCoc').className = 'rp-result-value ' + (cocReturn >= 0 ? 'positive' : 'negative');
document.getElementById('resNoi').innerHTML = formatCurrency(noi);
document.getElementById('resMortgage').innerHTML = formatCurrency(mortgagePayment);
document.getElementById('rpResultsSection').style.display = 'block';
}
function formatCurrency(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
Understanding Rental Property Cash Flow Analysis
Investing in real estate is one of the most reliable ways to build long-term wealth, but success hinges on the numbers. This Rental Property Cash Flow Calculator helps investors analyze potential deals by breaking down income, operating expenses, and financing costs to determine the true profitability of an asset.
What is Positive Cash Flow?
Positive cash flow occurs when a property's gross rental income exceeds all its expenses, including the mortgage, taxes, insurance, and maintenance reserves. It is essentially the profit you pocket every month. Achieving positive cash flow ensures that the investment pays for itself and provides you with passive income.
Key Metrics Used in This Calculator
NOI (Net Operating Income): This is the total income generated by the property minus all necessary operating expenses (excluding debt service). NOI is a critical metric for determining the raw profitability of a property before financing is considered.
Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (Down Payment). It is calculated by dividing the annual pre-tax cash flow by the total cash invested. A CoC return of 8-12% is generally considered a solid target for residential rentals.
Vacancy & Maintenance Reserves: Novice investors often forget to account for months when the property is empty or when repairs are needed. A standard rule of thumb is to set aside 10% to 15% of the gross rent for these inevitable costs.
The 1% Rule
A quick screening tool used by investors is the "1% Rule." This rule suggests that for a property to potentially be cash-flow positive, the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month. While not a hard rule, it helps filter out bad deals quickly.
How to Improve Cash Flow
If the numbers in the calculator show negative or low cash flow, consider these strategies:
Increase the Down Payment: This lowers the loan amount and the monthly mortgage payment.
Raise Rents: Check market comparables to ensure you aren't undercharging.
Reduce Expenses: Shop for cheaper insurance or challenge property tax assessments.
Value-Add: Renovate the property to command significantly higher rent.