function calculateRentalCashFlow() {
// Get Input Values
var price = parseFloat(document.getElementById('rp_price').value);
var closingCosts = parseFloat(document.getElementById('rp_closing_costs').value);
var downPercent = parseFloat(document.getElementById('rp_down_percent').value);
var interestRate = parseFloat(document.getElementById('rp_interest').value);
var loanTerm = parseFloat(document.getElementById('rp_term').value);
var rent = parseFloat(document.getElementById('rp_rent').value);
var vacancyRate = parseFloat(document.getElementById('rp_vacancy').value);
var taxYearly = parseFloat(document.getElementById('rp_tax').value);
var insuranceYearly = parseFloat(document.getElementById('rp_insurance').value);
var hoaMonthly = parseFloat(document.getElementById('rp_hoa').value);
var maintPercent = parseFloat(document.getElementById('rp_maintenance').value);
var mgmtPercent = parseFloat(document.getElementById('rp_management').value);
// Validation
if (isNaN(price) || isNaN(rent) || isNaN(interestRate) || isNaN(downPercent)) {
alert("Please enter valid numbers for Price, Rent, Down Payment, and Interest Rate.");
return;
}
// Initial Investment Calculations
var downPaymentAmt = price * (downPercent / 100);
var loanAmount = price – downPaymentAmt;
var totalCashInvested = downPaymentAmt + closingCosts;
// Mortgage Calculation (Monthly P&I)
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
monthlyMortgage = loanAmount / totalPayments;
}
// Income Calculations
var vacancyLoss = rent * (vacancyRate / 100);
var effectiveMonthlyIncome = rent – vacancyLoss;
var annualGrossIncome = effectiveMonthlyIncome * 12;
// Expense Calculations (Monthly)
var taxMonthly = taxYearly / 12;
var insuranceMonthly = insuranceYearly / 12;
var maintMonthly = rent * (maintPercent / 100);
var mgmtMonthly = rent * (mgmtPercent / 100);
var totalMonthlyExpenses = taxMonthly + insuranceMonthly + hoaMonthly + maintMonthly + mgmtMonthly;
var annualOperatingExpenses = totalMonthlyExpenses * 12;
// Cash Flow Calculations
var monthlyCashFlow = effectiveMonthlyIncome – totalMonthlyExpenses – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// ROI Metrics
var noi = annualGrossIncome – annualOperatingExpenses;
var capRate = (noi / price) * 100;
var cashOnCash = (annualCashFlow / totalCashInvested) * 100;
// Formatting helpers
function formatMoney(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
// Update DOM
document.getElementById('res_eff_income').innerText = formatMoney(effectiveMonthlyIncome);
document.getElementById('res_opex').innerText = formatMoney(totalMonthlyExpenses);
document.getElementById('res_mortgage').innerText = formatMoney(monthlyMortgage);
var cfElement = document.getElementById('res_cashflow');
cfElement.innerText = formatMoney(monthlyCashFlow);
cfElement.className = monthlyCashFlow >= 0 ? "rp-result-value rp-highlight" : "rp-result-value rp-negative";
document.getElementById('res_initial_invest').innerText = formatMoney(totalCashInvested);
document.getElementById('res_noi').innerText = formatMoney(noi);
document.getElementById('res_cap_rate').innerText = capRate.toFixed(2) + '%';
var cocElement = document.getElementById('res_coc');
cocElement.innerText = cashOnCash.toFixed(2) + '%';
cocElement.className = cashOnCash >= 0 ? "rp-result-value rp-highlight" : "rp-result-value rp-negative";
// Show results
document.getElementById('rp_result_area').style.display = 'block';
}
Understanding Rental Property ROI
Investing in real estate is one of the most reliable ways to build long-term wealth, but success hinges on the numbers. Unlike stocks, where the market determines value daily, real estate requires active calculation to determine profitability. This Rental Property Cash Flow Calculator helps investors analyze potential deals by breaking down income, expenses, and debt service to reveal the true return on investment (ROI).
Why Cash Flow is King
Cash flow is the net amount of money moving into or out of your rental business after all expenses and mortgage payments are made. Positive cash flow ensures that the property pays for itself and provides you with passive income. Experienced investors often prioritize cash flow over appreciation because it reduces risk during market downturns.
To calculate cash flow accurately, you must account for "hidden" costs like vacancy (periods where the property sits empty) and maintenance reserves (funds set aside for future repairs like a new roof or water heater).
Key Metrics Explained
Net Operating Income (NOI): This is your total income minus operating expenses, excluding mortgage payments. It represents the profitability of the property itself, regardless of how it is financed.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price. This metric allows you to compare the profitability of different properties without factoring in loans. A higher cap rate generally indicates a better return, though often comes with higher risk.
Cash on Cash Return (CoC): Calculated as Annual Cash Flow / Total Cash Invested. This is arguably the most important metric for leveraged investors. It tells you exactly how hard your actual cash (down payment + closing costs) is working for you. A 10% CoC means you earn back 10% of your initial investment every year.
Estimating Expenses Accurately
One of the most common mistakes new landlords make is underestimating expenses. When using this calculator, ensure you are realistic about:
Vacancy Rates: Typically 5-8% in most urban markets.
Maintenance: Setting aside 5-10% of monthly rent is a prudent standard for older homes.
Property Management: If you don't plan to answer tenant calls at 2 AM, budget 8-10% of rent for professional management.
By inputting conservative estimates into the calculator above, you can safeguard your investment against unexpected costs and ensure your rental property remains a profitable asset in your portfolio.