Rental Property Cash Flow Calculator
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Rental Property Cash Flow Calculator
Investment Analysis
Total Cash Needed (Down + Closing):
Monthly Mortgage (P&I):
Total Monthly Expenses:
Net Operating Income (NOI) / Month:
Monthly Cash Flow:
Cash on Cash Return (Annual):
How to Calculate Rental Property Cash Flow
Understanding the numbers is the most critical skill for any real estate investor. While appreciation is a nice bonus, positive cash flow is what keeps your business afloat and allows you to scale. This Rental Property Cash Flow Calculator helps you evaluate whether a potential deal is a smart investment or a financial burden.
What is Cash Flow in Real Estate?
Cash flow is the profit remaining after you have collected all rental income and paid all operating expenses and debt service (mortgage payments). It is essentially the passive income that goes into your pocket every month.
The formula for cash flow is simple:
Cash Flow = Total Income - Total Expenses - Debt Service
Key Metrics Explained
1. Net Operating Income (NOI)
NOI is a calculation used to analyze the profitability of income-generating real estate investments. It equals all revenue from the property, minus all necessary operating expenses. Note: NOI includes costs like insurance, taxes, and maintenance, but it excludes mortgage payments.
2. Cash on Cash Return (CoC)
This is arguably the most important metric for investors using leverage (loans). It measures the annual return on the actual cash you invested, rather than the total purchase price.
CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) * 100
For example, if you invest $50,000 to buy a house (down payment + closing costs) and it generates $5,000 in net cash flow per year, your Cash on Cash return is 10%. A good CoC return varies by market, but many investors target 8-12%.
Inputs Used in This Calculator
- Vacancy Rate: Properties won't be occupied 100% of the time. It is prudent to budget 5-8% of rent for vacancy loss.
- Maintenance & CapEx: Even newly renovated homes need repairs. Setting aside 5-10% of monthly rent ensures you have funds for broken toilets or a new roof.
- Management Fee: If you hire a property manager, they typically charge 8-10% of collected rent. Even if you self-manage, you should account for this cost to see if the deal still works as a passive investment.
How to Improve Cash Flow
If the calculator shows negative or low cash flow, consider these strategies:
- Negotiate a lower purchase price to reduce the mortgage payment.
- Increase the down payment to lower the loan amount.
- Look for ways to increase rent (e.g., cosmetic renovations, adding amenities).
- Shop around for cheaper insurance or challenge the property tax assessment.
function calculateCashFlow() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var taxesYear = parseFloat(document.getElementById('annualTaxes').value);
var insuranceYear = parseFloat(document.getElementById('annualInsurance').value);
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value);
var maintPct = parseFloat(document.getElementById('maintenanceRate').value);
var mgmtPct = parseFloat(document.getElementById('mgmtFee').value);
// Validation
if (isNaN(price) || isNaN(rent) || isNaN(rate) || isNaN(years)) {
alert("Please enter valid numbers for Price, Rent, Interest Rate, and Loan Term.");
return;
}
// 2. Calculate Initial Cash Invested
// Assuming 3% closing costs for the sake of the CoC calculation estimate
var closingCostEst = price * 0.03;
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var totalInitialCash = downPaymentAmount + closingCostEst;
// 3. Calculate Mortgage Payment (Principal + Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (rate / 100) / 12;
var numPayments = years * 12;
var monthlyMortgage = 0;
if (rate === 0) {
monthlyMortgage = loanAmount / numPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
// 4. Calculate Monthly Expenses
var monthlyTaxes = taxesYear / 12;
var monthlyInsurance = insuranceYear / 12;
var monthlyVacancy = rent * (vacancyPct / 100);
var monthlyMaint = rent * (maintPct / 100);
var monthlyMgmt = rent * (mgmtPct / 100);
var totalOperatingExpenses = monthlyTaxes + monthlyInsurance + monthlyVacancy + monthlyMaint + monthlyMgmt;
// 5. Calculate Metrics
var noiMonthly = rent – totalOperatingExpenses;
var cashFlowMonthly = noiMonthly – monthlyMortgage;
var cashFlowAnnual = cashFlowMonthly * 12;
var cocReturn = (cashFlowAnnual / totalInitialCash) * 100;
// 6. Display Results
var resultDiv = document.getElementById('results');
resultDiv.style.display = 'block';
// Helper to format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
// Set Text Content
document.getElementById('resInitialCash').innerText = formatter.format(totalInitialCash);
document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('resExpenses').innerText = formatter.format(totalOperatingExpenses + monthlyMortgage); // Operating + Debt
document.getElementById('resNOI').innerText = formatter.format(noiMonthly);
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = formatter.format(cashFlowMonthly);
// Color coding for cash flow
if (cashFlowMonthly >= 0) {
cfElement.className = "result-value positive";
} else {
cfElement.className = "result-value negative";
}
var cocElement = document.getElementById('resCoC');
cocElement.innerText = cocReturn.toFixed(2) + "%";
if (cocReturn >= 0) {
cocElement.className = "result-value positive";
} else {
cocElement.className = "result-value negative";
}
}