function calculateRentalCashFlow() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('rp_price').value) || 0;
var closing = parseFloat(document.getElementById('rp_closing').value) || 0;
var down = parseFloat(document.getElementById('rp_down').value) || 0;
var rate = parseFloat(document.getElementById('rp_rate').value) || 0;
var term = parseFloat(document.getElementById('rp_term').value) || 0;
var rent = parseFloat(document.getElementById('rp_rent').value) || 0;
var taxYearly = parseFloat(document.getElementById('rp_tax').value) || 0;
var insYearly = parseFloat(document.getElementById('rp_ins').value) || 0;
var hoa = parseFloat(document.getElementById('rp_hoa').value) || 0;
var maintPercent = parseFloat(document.getElementById('rp_maint').value) || 0;
var vacPercent = parseFloat(document.getElementById('rp_vac').value) || 0;
// 2. Validate essential inputs to prevent NaN errors
if (price === 0 || term === 0) {
alert("Please enter a valid Purchase Price and Loan Term.");
return;
}
// 3. Loan Calculation
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
var monthlyMortgage = 0;
if (rate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 4. Expense Calculations
var vacancyCost = rent * (vacPercent / 100);
var maintCost = rent * (maintPercent / 100);
var taxMonthly = taxYearly / 12;
var insMonthly = insYearly / 12;
var effectiveGrossIncome = rent – vacancyCost;
var operatingExpenses = taxMonthly + insMonthly + hoa + maintCost;
var totalExpenses = operatingExpenses + monthlyMortgage;
// 5. KPI Calculations
var monthlyNOI = effectiveGrossIncome – operatingExpenses;
var monthlyCashFlow = monthlyNOI – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
var totalInitialCash = down + closing;
var cocReturn = 0;
if (totalInitialCash > 0) {
cocReturn = (annualCashFlow / totalInitialCash) * 100;
}
var annualNOI = monthlyNOI * 12;
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 6. Output Formatting
document.getElementById('rp_res_flow').innerText = '$' + monthlyCashFlow.toFixed(2);
document.getElementById('rp_res_noi').innerText = '$' + monthlyNOI.toFixed(2);
document.getElementById('rp_res_mortgage').innerText = '$' + monthlyMortgage.toFixed(2);
document.getElementById('rp_res_expenses').innerText = '$' + totalExpenses.toFixed(2);
document.getElementById('rp_res_coc').innerText = cocReturn.toFixed(2) + '%';
document.getElementById('rp_res_cap').innerText = capRate.toFixed(2) + '%';
// 7. Show Results
document.getElementById('rp_results').style.display = 'block';
}
Understanding Rental Property Cash Flow
Investing in real estate is a powerful way to build wealth, but the success of an investment typically comes down to the numbers. This Rental Property Cash Flow Calculator is designed to help investors analyze the potential profitability of a residential rental property.
What is Cash Flow?
Cash flow is the net amount of cash moving in and out of a business. In real estate, positive cash flow means the property's rental income exceeds all expenses, including the mortgage, taxes, insurance, and maintenance. Negative cash flow implies that you must pay out of pocket every month to keep the property running, which is a risky strategy for most investors.
Key Metrics Explained
When analyzing a deal using the calculator above, focus on these critical metrics:
Net Operating Income (NOI): This is your profitability before the mortgage payment is made. It is calculated by subtracting operating expenses (vacancy, taxes, insurance, maintenance) from the effective rental income.
Cash on Cash Return (CoC): This is arguably the most important metric for ROI. It measures the annual cash flow relative to the actual cash you invested (down payment + closing costs). A CoC return of 8-12% is often considered a solid benchmark for rental properties.
Cap Rate (Capitalization Rate): This metric evaluates the profitability of the property irrespective of how it is financed. It is calculated as Annual NOI divided by the Purchase Price. It helps compare properties in different markets.
How to Use This Calculator
To get the most accurate results, input realistic numbers based on the local market:
Estimating Rents: Look at comparable rentals ("comps") in the area on sites like Zillow or Rentometer to determine a realistic monthly rent.
Vacancy Rate: Never assume 100% occupancy. A 5% vacancy rate (about 18 days empty per year) is a standard conservative estimate.
Maintenance & CapEx: Budgeting 5% to 10% of the monthly rent for repairs ensures you aren't surprised when a water heater breaks or the roof needs patching.
Why "Cash Flow is King"
While appreciation (the property increasing in value) is a nice bonus, it is speculative. Cash flow is tangible income that pays for the asset and puts money in your pocket today. A property with strong positive cash flow provides a buffer against market downturns, as the rental income continues to service the debt regardless of the property's market value.