function calculateRentalCashFlow() {
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPct = parseFloat(document.getElementById('downPaymentPercent').value) / 100;
var rate = parseFloat(document.getElementById('interestRate').value) / 100 / 12;
var term = parseFloat(document.getElementById('loanTerm').value) * 12;
var rent = parseFloat(document.getElementById('grossRent').value);
var taxes = parseFloat(document.getElementById('taxes').value);
var insurance = parseFloat(document.getElementById('insurance').value);
var maintPct = parseFloat(document.getElementById('maintenance').value) / 100;
if (isNaN(price) || isNaN(rent)) {
alert("Please enter valid numbers for Price and Rent.");
return;
}
var downAmt = price * downPct;
var loanAmt = price – downAmt;
// Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mortgage = 0;
if (rate > 0) {
mortgage = loanAmt * (rate * Math.pow(1 + rate, term)) / (Math.pow(1 + rate, term) – 1);
} else {
mortgage = loanAmt / term;
}
var maintCost = rent * maintPct;
var totalExpenses = taxes + insurance + maintCost;
var totalOutflow = mortgage + totalExpenses;
var netCashFlow = rent – totalOutflow;
var annualCashFlow = netCashFlow * 12;
var cocReturn = (annualCashFlow / downAmt) * 100;
document.getElementById('resMortgage').innerText = "$" + mortgage.toFixed(2);
document.getElementById('resExpenses').innerText = "$" + totalExpenses.toFixed(2);
document.getElementById('resOutflow').innerText = "$" + totalOutflow.toFixed(2);
var flowEl = document.getElementById('resCashFlow');
flowEl.innerText = "$" + netCashFlow.toFixed(2);
if (netCashFlow < 0) {
flowEl.className = "result-value neg-value";
} else {
flowEl.className = "result-value";
}
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('results').style.display = "block";
}
Understanding Rental Property Cash Flow Analysis
In the world of real estate investing, "Cash is King." While property appreciation and tax benefits are important, monthly cash flow is the engine that sustains a successful portfolio. This rental property cash flow calculator helps you determine if a potential investment will put money in your pocket or take it out.
The Core Formula for Cash Flow
Calculating cash flow is more than just subtracting your mortgage from your rent. A professional analysis includes several layers of data:
Gross Rental Income: The total monthly rent collected from tenants.
Operating Expenses: These include property taxes, landlord insurance, property management fees, and utilities not paid by tenants.
Variable Expenses: Smart investors set aside a percentage (typically 5-10%) for maintenance, repairs, and vacancy periods.
Debt Service: Your monthly principal and interest payment to the lender.
What is Cash-on-Cash Return?
Our calculator also provides the Cash-on-Cash (CoC) Return. This metric measures the annual return on the actual money you invested (your down payment and closing costs). For example, if you invest $60,000 (down payment) and receive $6,000 in annual net cash flow, your CoC return is 10%. This is often a more accurate measure of performance than total property value appreciation.
A Realistic Example
Imagine you buy a duplex for $300,000 with a 20% down payment ($60,000). At a 6.5% interest rate, your mortgage is roughly $1,517. If each unit rents for $1,250 ($2,500 total), you might think you are making $1,000 profit. However, after accounting for $300 in taxes, $100 in insurance, and a 10% reserve for maintenance ($250), your real net cash flow is closer to $333 per month.
Tips for Improving Cash Flow
If your calculation shows negative or "thin" cash flow, consider these strategies:
Increase the Down Payment: A larger down payment reduces your monthly loan balance and interest expense.
Value-Add Improvements: Renovate kitchens or bathrooms to justify higher rent premiums.
Reduce Expenses: Contest property tax assessments or shop for better insurance rates annually.
Self-Manage: While time-consuming, managing the property yourself can save 8-12% in management fees.