Analyze your real estate investment potential instantly.
Purchase & Financing
Income & Expenses
Monthly Principal & Interest:$0.00
Monthly Operating Expenses:$0.00
Total Monthly Expenses:$0.00
Monthly Cash Flow
$0.00
Cash on Cash Return (ROI)
0.00%
How to Calculate Rental Property Cash Flow
Calculating cash flow is the most critical step in evaluating a real estate investment. Positive cash flow ensures that the property pays for itself while generating income for the investor. Conversely, negative cash flow implies that you will need to inject capital every month to keep the property afloat, which increases risk.
1. Understanding the Formula
The basic formula for rental property cash flow is straightforward:
Cash Flow = Gross Income – Total Expenses
However, accurate calculation requires breaking down expenses into two categories: financing costs (your mortgage) and operating expenses (taxes, insurance, maintenance, vacancy, etc.).
2. Key Metrics Explained
Gross Rental Income: The total amount of rent collected per month.
Vacancy Rate: Properties are rarely occupied 365 days a year. A standard conservative estimate is 5-8% of rent to account for turnover periods.
Operating Expenses (OpEx): These include property taxes, landlord insurance, HOA fees, repairs, maintenance reserves, and property management fees.
Cash on Cash Return (CoC): This is your return on investment based on the actual cash you put into the deal (Down Payment + Closing Costs). It is calculated as (Annual Cash Flow / Total Cash Invested) * 100.
3. The 1% Rule
A popular "rule of thumb" for screening properties is the 1% rule, which states that the monthly rent should be at least 1% of the purchase price. While this doesn't guarantee positive cash flow (especially with high interest rates or taxes), it serves as a quick filter to identify potential deals worth analyzing with the calculator above.
4. Why Repairs and CapEx Matter
New investors often forget to budget for repairs (fixing a leaking faucet) and Capital Expenditures (CapEx – replacing a roof or HVAC). Setting aside 5-10% of monthly rent for these future costs is essential to avoid sudden financial shocks that can wipe out your annual profits.
function calculateRental() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('rp_price').value);
var downPct = parseFloat(document.getElementById('rp_down').value);
var rate = parseFloat(document.getElementById('rp_rate').value);
var term = parseFloat(document.getElementById('rp_term').value);
var closing = parseFloat(document.getElementById('rp_closing').value);
var rent = parseFloat(document.getElementById('rp_rent').value);
var taxYear = parseFloat(document.getElementById('rp_tax').value);
var insYear = parseFloat(document.getElementById('rp_insurance').value);
var hoaMo = parseFloat(document.getElementById('rp_hoa').value);
var vacancyPct = parseFloat(document.getElementById('rp_vacancy').value);
var repairPct = parseFloat(document.getElementById('rp_repair').value);
var mgmtPct = parseFloat(document.getElementById('rp_mgmt').value);
// 2. Validation
if (isNaN(price) || isNaN(rent) || isNaN(rate) || isNaN(term)) {
alert("Please enter valid numbers for Price, Rent, Interest Rate, and Term.");
return;
}
// 3. Financing Calculations
var downAmount = price * (downPct / 100);
var loanAmount = price – downAmount;
var monthlyRate = (rate / 100) / 12;
var numPayments = term * 12;
// Mortgage P&I Formula
var monthlyPI = 0;
if (rate === 0) {
monthlyPI = loanAmount / numPayments;
} else {
monthlyPI = (loanAmount * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -numPayments));
}
// 4. Expense Calculations
var monthlyTax = taxYear / 12;
var monthlyIns = insYear / 12;
// Percentage based expenses
var monthlyVacancy = rent * (vacancyPct / 100);
var monthlyRepairs = rent * (repairPct / 100);
var monthlyMgmt = rent * (mgmtPct / 100);
var totalOpEx = monthlyTax + monthlyIns + hoaMo + monthlyVacancy + monthlyRepairs + monthlyMgmt;
var totalExpenses = totalOpEx + monthlyPI;
// 5. Income & Return Calculations
var cashFlow = rent – totalExpenses;
var annualCashFlow = cashFlow * 12;
var totalCashInvested = downAmount + closing;
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// 6. formatting helper
function formatCurrency(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
// 7. Update UI
document.getElementById('res_mortgage').innerText = formatCurrency(monthlyPI);
document.getElementById('res_opex').innerText = formatCurrency(totalOpEx);
document.getElementById('res_total_exp').innerText = formatCurrency(totalExpenses);
var cfEl = document.getElementById('res_cashflow');
cfEl.innerText = formatCurrency(cashFlow);
if (cashFlow >= 0) {
cfEl.style.color = "#27ae60"; // Green
} else {
cfEl.style.color = "#c0392b"; // Red
}
document.getElementById('res_coc').innerText = cocReturn.toFixed(2) + "%";
// Show results
document.getElementById('rp_results_area').style.display = "block";
}