Property Info & Financing
Income & Expenses
Monthly Mortgage P&I:
$0.00
Total Monthly Expenses:
$0.00
Net Operating Income (NOI) / Mo:
$0.00
Monthly Cash Flow:
$0.00
Cap Rate
0.00%
Cash-on-Cash Return
0.00%
Understanding Rental Property Cash Flow
Investing in real estate is a powerful way to build wealth, but the numbers must make sense. This Rental Property Cash Flow Calculator helps investors analyze potential deals by breaking down income, operating expenses, and debt service to reveal the true profitability of an asset.
What is Cash Flow?
Cash flow is the net amount of money moving into or out of a rental property business after all expenses are paid. Positive cash flow means your property generates more income than it costs to own, while negative cash flow implies you are losing money every month to hold the asset.
The formula used in this calculator is:
- Gross Income: Total rent collected.
- Operating Expenses: Taxes, insurance, HOA, vacancy provision, and repairs.
- Net Operating Income (NOI): Gross Income minus Operating Expenses.
- Cash Flow: NOI minus Mortgage Debt Service.
Key Metrics Explained
Beyond simple monthly profit, successful investors look at specific efficiency ratios:
1. Cap Rate (Capitalization Rate)
Calculated as (NOI / Purchase Price) × 100. This metric measures the natural rate of return on the property assuming you paid all cash. It helps compare the profitability of different properties regardless of how they are financed.
2. Cash-on-Cash Return (CoC)
Calculated as (Annual Cash Flow / Total Cash Invested) × 100. This is often considered the most important metric for investors using leverage (mortgages). It tells you how hard your actual down payment dollars are working for you. A CoC of 8-12% is often considered a solid target in many markets.
Estimating Variable Expenses
Novice investors often underestimate costs. This calculator includes inputs for:
- Vacancy Rate: Properties won't be occupied 365 days a year. A standard 5-8% allowance ensures you aren't caught off guard during turnover.
- CapEx & Maintenance: Roofs leak and water heaters break. Setting aside 5-10% of monthly rent creates a reserve fund for these inevitable costs.
How to Interpret Your Results
If your Monthly Cash Flow is positive, the property pays for itself and provides passive income. If it is negative, you must decide if the potential for property appreciation justifies the monthly cost of holding the investment.