function calculateInvestment() {
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPaymentPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var annualTaxes = parseFloat(document.getElementById('annualTaxes').value);
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value);
var maintenancePercent = parseFloat(document.getElementById('maintenancePercent').value) / 100;
var vacancyPercent = parseFloat(document.getElementById('vacancyPercent').value) / 100;
if (isNaN(purchasePrice) || isNaN(monthlyRent)) {
alert("Please enter valid numbers for price and rent.");
return;
}
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var months = 360; // 30-year fixed
// Mortgage calculation
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (interestRate * Math.pow(1 + interestRate, months)) / (Math.pow(1 + interestRate, months) – 1);
} else {
monthlyMortgage = loanAmount / months;
}
// Operating Expenses
var monthlyTaxes = annualTaxes / 12;
var monthlyInsurance = annualInsurance / 12;
var monthlyMaintenance = monthlyRent * maintenancePercent;
var monthlyVacancy = monthlyRent * vacancyPercent;
var totalMonthlyExpenses = monthlyMortgage + monthlyTaxes + monthlyInsurance + monthlyMaintenance + monthlyVacancy;
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// NOI for Cap Rate (Before Mortgage)
var annualNOI = (monthlyRent * 12) – ((monthlyTaxes + monthlyInsurance + monthlyMaintenance + monthlyVacancy) * 12);
var capRate = (annualNOI / purchasePrice) * 100;
// Cash on Cash Return
var cocReturn = (annualCashFlow / downPaymentAmount) * 100;
// Format Output
document.getElementById('resCashFlow').innerText = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('resExpenses').innerText = "$" + totalMonthlyExpenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMortgage').innerText = "$" + monthlyMortgage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resInitial').innerText = "$" + downPaymentAmount.toLocaleString();
document.getElementById('results').style.display = 'block';
}
How to Calculate Investment Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but the "gold standard" of a good rental property is its ability to generate positive cash flow. Cash flow is the amount of profit you have left over after all operating expenses and mortgage payments have been made.
Key Metrics for Real Estate Investors
Cap Rate (Capitalization Rate): This measures the property's natural rate of return without considering financing. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. A "good" cap rate is typically between 5% and 10%, depending on the market.
Cash on Cash Return (CoC): This is the most important metric for most investors. it calculates the annual cash flow relative to the actual cash you invested (your down payment). It shows how hard your liquid cash is working for you.
The 1% Rule: A quick thumb-rule suggesting that a property should rent for at least 1% of its purchase price to likely be cash-flow positive.
A Realistic Example
Imagine you purchase a property for $300,000 with a 20% down payment ($60,000). At a 6.5% interest rate, your mortgage payment is roughly $1,517. If the property rents for $2,500, you must also account for:
✓ Property Taxes: $300/mo
✓ Insurance: $100/mo
✓ Maintenance (10%): $250/mo
✓ Vacancy (5%): $125/mo
Your total expenses would be approximately $2,292. This leaves you with a Monthly Cash Flow of $208. While this might seem small, you are also building equity as the tenant pays down your loan, and you may benefit from property appreciation over time.
Hidden Costs to Watch For
Many first-time investors fail to account for "CapEx" (Capital Expenditures). These are big-ticket items like a new roof, HVAC system, or water heater. We recommend setting aside at least 5-10% of your gross rent specifically for these future repairs to ensure your cash flow remains sustainable over the long term.