Investing in real estate is one of the most reliable ways to build wealth, but it requires careful analysis. This Rental Property Cash Flow Calculator helps investors determine if a specific property will generate profit (positive cash flow) or cost money to hold (negative cash flow).
What is Rental Cash Flow?
Cash flow is the net amount of cash moving in and out of a business. For rental properties, it is calculated as:
Cash Flow = Total Rental Income – Total Expenses
Total expenses include the mortgage payment (principal and interest), property taxes, insurance, maintenance costs, vacancy reserves, property management fees, and homeowners association (HOA) dues.
Key Metrics Explained
Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (down payment + closing costs). A CoC return of 8-12% is often considered good for residential real estate.
Cap Rate (Capitalization Rate): This metric indicates the rate of return on a real estate investment property based on the income that the property is expected to generate, excluding financing costs. It helps compare properties regardless of how they are paid for.
NOI (Net Operating Income): The total income minus all operating expenses, excluding the mortgage payment.
How to Use This Calculator
Enter Purchase Details: Input the price of the home and your loan details. The calculator uses this to estimate your monthly mortgage payment.
Estimate Income: Enter the expected monthly rent. Be realistic—check comparable rentals in the area (comps).
Account for Expenses: Don't just list the mortgage. You must account for vacancy (typically 5-8%), repairs (maintenance), taxes, and insurance. Ignoring these leads to "fake cash flow" estimates.
Analyze the Result: Look for a positive monthly cash flow. If the number is negative, the property will drain your bank account every month unless you can increase rent or decrease expenses.
Frequently Asked Questions
What is the 1% Rule in Real Estate?
The 1% rule is a quick screening tool used by investors. It suggests that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 house should rent for at least $2,000/month. While not a hard rule, properties meeting this criteria often have better cash flow.
Why should I include a vacancy rate?
No property is rented 100% of the time. Tenants move out, and it takes time to clean, repair, and find new tenants. Allocating 5% to 8% of monthly rent for vacancy ensures you have savings to cover the mortgage during these empty months.
What is a good Cash on Cash return?
While this varies by market and investor goals, a Cash on Cash return of 8% to 12% is generally considered a solid investment in the stock market comparison context. Some aggressive investors look for 15%+, while those in high-appreciation markets might accept 4-6%.
function calculateRental() {
// Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value);
var annualTax = parseFloat(document.getElementById('propertyTax').value);
var annualInsurance = parseFloat(document.getElementById('insurance').value);
var monthlyMaint = parseFloat(document.getElementById('maintenance').value);
var mgmtPercent = parseFloat(document.getElementById('managementFee').value);
var monthlyHOA = parseFloat(document.getElementById('hoa').value);
// Validation
if (isNaN(price) || isNaN(rent)) {
alert("Please enter valid numbers for Price and Rent.");
return;
}
// Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
// Mortgage Payment (Principal + Interest)
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = years * 12;
var mortgagePayment = 0;
if (interestRate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
} else {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Monthly Expenses
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var vacancyCost = rent * (vacancyPercent / 100);
var mgmtCost = rent * (mgmtPercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyMaint + vacancyCost + mgmtCost + monthlyHOA;
var totalExpenses = totalOperatingExpenses + mortgagePayment;
// Metrics
var monthlyCashFlow = rent – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = (rent * 12) – (totalOperatingExpenses * 12);
// Cap Rate = (NOI / Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash = (Annual Cash Flow / Total Cash Invested) * 100
// Assuming Closing Costs are roughly 2% of purchase price for calculation accuracy, or just use down payment
// For this specific logic, let's assume Cash Invested = Down Payment for simplicity, or we can add a fixed closing cost estimate.
// Let's stick to Down Payment to match inputs.
var cashInvested = downPaymentAmount;
var cocReturn = 0;
if (cashInvested > 0) {
cocReturn = (annualCashFlow / cashInvested) * 100;
}
// Display Results
document.getElementById('monthlyCashFlow').innerText = formatCurrency(monthlyCashFlow);
document.getElementById('monthlyCashFlow').className = 'result-value ' + (monthlyCashFlow >= 0 ? 'positive' : 'negative');
document.getElementById('cashOnCash').innerText = cocReturn.toFixed(2) + '%';
document.getElementById('cashOnCash').className = 'result-value ' + (cocReturn >= 0 ? 'positive' : 'negative');
document.getElementById('capRate').innerText = capRate.toFixed(2) + '%';
document.getElementById('noi').innerText = formatCurrency(annualNOI);
document.getElementById('totalExpenses').innerText = formatCurrency(totalExpenses);
document.getElementById('mortgagePayment').innerText = formatCurrency(mortgagePayment);
// Show results container
document.getElementById('results').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}