function calculateROI() {
// Get Input Values
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var closingCosts = parseFloat(document.getElementById("closingCosts").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var propertyTax = parseFloat(document.getElementById("propertyTax").value);
var insurance = parseFloat(document.getElementById("insurance").value);
var hoa = parseFloat(document.getElementById("hoa").value);
var maintenance = parseFloat(document.getElementById("maintenance").value);
// Validation
if (isNaN(purchasePrice) || isNaN(downPayment) || isNaN(interestRate) ||
isNaN(loanTerm) || isNaN(monthlyRent) || isNaN(propertyTax) ||
isNaN(insurance) || isNaN(maintenance)) {
document.getElementById("errorMsg").style.display = "block";
document.getElementById("resultContainer").style.display = "none";
return;
}
document.getElementById("errorMsg").style.display = "none";
// Mortgage Calculation (PI)
var loanAmount = purchasePrice – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
}
// Expense Calculations
var monthlyTax = propertyTax / 12;
var monthlyInsurance = insurance / 12;
var monthlyMaintenance = maintenance / 12;
var totalMonthlyOperatingExpenses = monthlyTax + monthlyInsurance + hoa + monthlyMaintenance;
var totalMonthlyExpenses = totalMonthlyOperatingExpenses + monthlyMortgage;
// Cash Flow Calculations
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// NOI Calculation (Rent – Operating Expenses, excluding mortgage)
var annualNOI = (monthlyRent * 12) – (totalMonthlyOperatingExpenses * 12);
// ROI Calculations
var totalInitialInvestment = downPayment + closingCosts;
// Cap Rate = (Annual NOI / Purchase Price) * 100
var capRate = (purchasePrice > 0) ? (annualNOI / purchasePrice) * 100 : 0;
// Cash on Cash Return = (Annual Cash Flow / Total Initial Investment) * 100
var cashOnCash = (totalInitialInvestment > 0) ? (annualCashFlow / totalInitialInvestment) * 100 : 0;
// Formatting Helper
function formatMoney(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
// Display Results
document.getElementById("resMortgage").innerHTML = formatMoney(monthlyMortgage);
document.getElementById("resExpenses").innerHTML = formatMoney(totalMonthlyExpenses);
// Style Cash Flow color
var cashFlowElement = document.getElementById("resCashFlow");
cashFlowElement.innerHTML = formatMoney(monthlyCashFlow);
cashFlowElement.style.color = monthlyCashFlow >= 0 ? "#27ae60" : "#c0392b";
document.getElementById("resNOI").innerHTML = formatMoney(annualNOI);
document.getElementById("resCapRate").innerHTML = capRate.toFixed(2) + "%";
// Style CoC color
var cocElement = document.getElementById("resCoC");
cocElement.innerHTML = cashOnCash.toFixed(2) + "%";
cocElement.style.color = cashOnCash >= 0 ? "#27ae60" : "#c0392b";
document.getElementById("resultContainer").style.display = "block";
}
Understanding Rental Property Cash Flow
Calculating the profitability of a rental property is crucial for real estate investors. It ensures that the property generates enough income to cover all expenses and provides a healthy return on investment (ROI). This Rental Property Cash Flow Calculator helps you break down the finances of a potential deal.
What is Cash on Cash Return?
Cash on Cash (CoC) Return is a metric used to calculate the cash income earned on the cash invested in a property. Unlike ROI, which might look at the total value of the asset including loans, CoC looks specifically at the actual dollars you put into the deal (Down Payment + Closing Costs) versus the net cash flow you receive annually.
Formula: (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100%
A good Cash on Cash return varies by market, but many investors aim for 8-12% or higher.
The Importance of Cap Rate
The Capitalization Rate (Cap Rate) measures a property's natural rate of return for a single year without considering debt (the mortgage). It helps compare the profitability of properties regardless of how they are financed.
Formula: (Net Operating Income / Current Market Value) x 100%
While Cap Rate is excellent for comparing properties, Cash on Cash return is often more practical for understanding your specific financial situation after leverage.
Key Factors Influencing Profitability
Vacancy Rates: Always account for periods when the property might sit empty. While this calculator uses gross rent, prudent investors often deduct 5-10% for vacancy.
Maintenance: Properties degrade over time. Setting aside 1% of the property value or 10% of the rent annually for repairs is a standard safety net.
Leverage: Using a mortgage increases your potential return (Cash on Cash) but also increases risk. A lower interest rate significantly boosts cash flow.
How to Use This Calculator
Enter the purchase details, including the price and loan terms. Be sure to estimate your expenses accurately. "HOA Fees" applies if the property is in a community association, and "Insurance" should cover landlord liability and hazard insurance. The calculator will immediately show you if the property is cash-flow positive (green) or negative (red).