Rental Property Cash Flow Calculator
Estimated % of time the unit is empty.
% of rent saved for repairs.
Investment Analysis
Monthly Cash Flow:
$0.00
Net Operating Income (Annual):
$0.00
Cash on Cash Return (CoC):
0.00%
Cap Rate:
0.00%
Total Monthly Expenses:
$0.00
Monthly Mortgage Payment (P&I):
$0.00
Understanding Rental Property Cash Flow
Before investing in real estate, calculating the potential cash flow is the most critical step. A rental property cash flow calculator helps investors determine if a property will generate a monthly profit after all expenses, mortgage payments, and reserves are accounted for. This tool allows you to analyze deals quickly and avoid negative cash flow situations.
Key Metrics Explained
1. Monthly Cash Flow
This is the net amount of money left in your pocket at the end of every month. It is calculated by subtracting total monthly expenses (mortgage, taxes, insurance, HOA, maintenance, and vacancy allowances) from your expected monthly rental income. A positive cash flow indicates a profitable investment.
2. Cash on Cash Return (CoC)
Cash on Cash Return measures the annual return on the actual cash you invested (down payment + closing costs + rehab costs). Unlike ROI, which might look at total loan value, CoC focuses purely on the efficiency of your deployed capital.
- Formula: (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100
- Good CoC: Generally, investors look for 8-12% or higher, depending on the market and risk profile.
3. Cap Rate (Capitalization Rate)
The Cap Rate helps compare the profitability of different properties assuming they were bought with cash. It measures the rate of return based on the Net Operating Income (NOI).
- Formula: (Net Operating Income / Purchase Price) x 100
- Note: Cap rate excludes mortgage costs, making it a pure measure of the property's asset performance.
What Expenses Should You Include?
Many new investors make the mistake of only counting the mortgage payment. To get an accurate picture, you must account for:
- Vacancy Rate: Properties are rarely occupied 100% of the time. Budgeting 5-8% for vacancy ensures you have a buffer.
- Maintenance & Repairs: Things break. Setting aside 10-15% of the rent for future repairs (HVAC, roof, plumbing) prevents surprise bills from wiping out your profit.
- Property Management: Even if you self-manage now, including a 10% management fee in your calculation ensures the deal still works if you hire a pro later.
How to Improve Cash Flow
If the numbers don't work initially, consider these strategies:
- Increase the Down Payment: This lowers the monthly mortgage payment.
- Shop for Insurance: Lowering annual premiums increases monthly net income.
- Value-Add Renovations: Small cosmetic updates can often justify a significant rent increase.