Calculating the cash flow of a rental property is the fundamental step in evaluating a real estate investment. Cash flow represents the net amount of money moving in or out of a business after all expenses have been paid. For real estate investors, positive cash flow means the property is generating income above and beyond the mortgage and operating costs.
How This Calculator Works
This Rental Property Cash Flow Calculator breaks down the investment potential by analyzing the relationship between income (rent) and expenses (mortgage, taxes, insurance, maintenance). Here is how the key metrics are determined:
Monthly Mortgage Payment: Calculated based on the loan principal (Purchase Price minus Down Payment), the annual interest rate, and the loan term. This uses the standard amortization formula.
Total Monthly Expenses: This is the sum of your mortgage payment (Principal & Interest) and your operational costs (taxes, HOA fees, vacancy reserves, repairs).
Net Cash Flow: This is simply Total Monthly Rent – Total Monthly Expenses. A positive number indicates profit, while a negative number indicates the property costs you money to hold.
Cash on Cash Return (CoC): This is a powerful metric that measures the annual return on the actual cash you invested (down payment). It is calculated as (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100.
Why is Cash on Cash Return Important?
While total profit matters, Cash on Cash (CoC) return tells you how hard your money is working. For example, if you invest $50,000 as a down payment and the property generates $5,000 in net annual cash flow, your CoC return is 10%. This allows you to compare real estate returns against other investment vehicles like stocks or bonds.
Estimating Expenses for Accurate Results
The biggest mistake new investors make is underestimating expenses. When using the "Monthly Expenses" field in this calculator, ensure you factor in:
Property Taxes (usually 1-2% of property value annually)
Homeowners Insurance
HOA Fees (if applicable)
Maintenance and Repairs (budget 5-10% of rent)
Vacancy Rate (budget 5-8% of rent)
Property Management Fees (typically 8-10% of rent if outsourced)
By inputting conservative estimates for expenses and realistic rental income figures, you can minimize risk and make data-driven investment decisions.
function calculateCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('otherExpenses').value);
// 2. Validate Inputs
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(years) || isNaN(rent) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 3. Logic Calculations
// Calculate Loan Principal
var downPaymentAmount = price * (downPercent / 100);
var loanPrincipal = price – downPaymentAmount;
// Calculate Monthly Mortgage (P&I)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (rate / 100) / 12;
var totalMonths = years * 12;
var monthlyMortgage = 0;
if (rate === 0) {
monthlyMortgage = loanPrincipal / totalMonths;
} else {
monthlyMortgage = loanPrincipal * (monthlyRate * Math.pow(1 + monthlyRate, totalMonths)) / (Math.pow(1 + monthlyRate, totalMonths) – 1);
}
// Calculate Totals
var totalMonthlyExpenses = monthlyMortgage + expenses;
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Calculate Cash on Cash Return
// Assuming Total Cash Invested is just Down Payment for this simplified tool
// (In reality, would include closing costs, rehab costs, etc.)
var cashInvested = downPaymentAmount;
var cocReturn = 0;
if (cashInvested > 0) {
cocReturn = (annualCashFlow / cashInvested) * 100;
}
// 4. Update UI
document.getElementById('resultsArea').style.display = 'block';
// Helper to format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('resTotalExp').innerText = formatter.format(totalMonthlyExpenses);
var cfEl = document.getElementById('resMonthlyCashFlow');
cfEl.innerText = formatter.format(monthlyCashFlow);
cfEl.className = 'result-value ' + (monthlyCashFlow >= 0 ? 'positive' : 'negative');
var annualCfEl = document.getElementById('resAnnualCashFlow');
annualCfEl.innerText = formatter.format(annualCashFlow);
annualCfEl.className = 'result-value ' + (annualCashFlow >= 0 ? 'positive' : 'negative');
var cocEl = document.getElementById('resCoc');
cocEl.innerText = cocReturn.toFixed(2) + "%";
cocEl.className = 'result-value ' + (cocReturn >= 0 ? 'positive' : 'negative');
}