Rental Property Cash Flow Calculator
Please enter valid positive numbers in all required fields.
Monthly Mortgage (P&I):
$0.00
Total Monthly Expenses:
$0.00
Monthly Cash Flow:
$0.00
Cash on Cash Return (CoC):
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Cap Rate:
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Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but the success of an investment hinges on the numbers. Our Rental Property Cash Flow Calculator helps you analyze a potential deal by breaking down income, expenses, and key return metrics. Before you sign a purchase agreement, it is crucial to understand whether the property is an asset that puts money in your pocket or a liability that takes it out.
What is Monthly Cash Flow?
Monthly Cash Flow is the net profit you realize from a property after all expenses are paid. It is calculated by subtracting your total monthly expenses (mortgage, taxes, insurance, maintenance, vacancy reserves) from your total monthly rental income. Positive cash flow means the property pays for itself and generates income, while negative cash flow implies you must contribute personal funds to keep the property running.
Formula: Cash Flow = Rental Income – (Mortgage + Operating Expenses)
Key Metrics Explained
- Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment + closing costs). It is a vital metric for comparing real estate returns against other investment vehicles like stocks. A CoC return of 8-12% is generally considered good in many markets.
- Cap Rate (Capitalization Rate): Cap Rate indicates the rate of return on a real estate investment property based on the income that the property is expected to generate. It is calculated by dividing the Net Operating Income (NOI) by the property asset value. It helps compare properties regardless of financing.
- Net Operating Income (NOI): This is the annual income generated by a property after deducting all operating expenses but before deducting taxes and financing costs.
How to Estimate Expenses Accurately
One of the biggest mistakes new investors make is underestimating expenses. Beyond the mortgage payment, you must account for:
- Vacancy: Properties are rarely occupied 100% of the time. Budgeting 5-10% of rent for vacancy ensures you can cover the mortgage during turnover.
- Maintenance (CapEx): Roofs leak and water heaters break. Setting aside 5-15% of monthly rent creates a safety net for repairs.
- Property Management: If you don't plan to be a landlord yourself, professional management typically costs 8-12% of the monthly rent.
Using the Calculator
To get the most accurate results from this calculator, input the exact loan terms you expect to receive and be conservative with your rental income estimates. If the numbers work with conservative estimates, the deal is likely safer. Adjust the "Down Payment" and "Purchase Price" fields to see how different financing structures impact your Cash on Cash Return.