Analyze your real estate investment deal to determine ROI and monthly cash flow.
Purchase Details
Loan Details
Rental Income
Recurring Expenses
Investment Analysis
Monthly Cash Flow
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Cash on Cash ROI
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Cap Rate
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Total Cash Needed
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Monthly Expenses
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Mortgage Payment
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Understanding Rental Property Cash Flow Analysis
Calculating the potential return on investment (ROI) for a rental property is the most critical step for any real estate investor. Unlike buying a primary residence, where emotion plays a role, an investment property is purely a numbers game. This calculator helps you determine if a property is an asset that puts money in your pocket, or a liability that takes it out.
Key Metrics Explained
Cash Flow: This is the net amount of money left over each month after all operating expenses and mortgage payments have been made. Positive cash flow is essential for long-term sustainability.
Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment, closing costs, and rehab costs). It is a superior metric to simple ROI because it accounts for leverage (the mortgage). A CoC return of 8-12% is generally considered good in many markets.
Cap Rate (Capitalization Rate): Cap rate measures the property's natural rate of return without factoring in the mortgage. It is calculated by dividing the Net Operating Income (NOI) by the purchase price. This helps compare properties regardless of how they are financed.
Estimating Expenses Accurately
Novice investors often underestimate expenses. Beyond the obvious mortgage, tax, and insurance, you must account for:
Vacancy: Properties will not be rented 365 days a year. A standard safe estimate is 5-8% (about 2-3 weeks of vacancy per year).
Maintenance & CapEx: Even if the house is new, things break. Setting aside 5-10% of rent for repairs ensures you aren't caught off guard by a broken water heater or roof leak.
Property Management: Even if you plan to self-manage, it is wise to calculate the deal with a 8-10% management fee. This ensures the deal still works if you eventually decide to hire a professional manager.
How to Improve Your ROI
If the numbers in the calculator show negative or low cash flow, consider these adjustments:
Negotiate the Purchase Price: Lowering your entry cost improves all metrics immediately.
Increase Down Payment: Putting more money down reduces the monthly mortgage payment, increasing cash flow (though this may lower your Cash on Cash return initially).
Value-Add Improvements: Renovations (accounted for in "Rehab Costs") that allow you to charge higher rent can significantly boost your Cap Rate and overall returns.
function calculateRental() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var rehabCosts = parseFloat(document.getElementById('rehabCosts').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 0;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var annualTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var annualInsurance = parseFloat(document.getElementById('insurance').value) || 0;
var monthlyHOA = parseFloat(document.getElementById('hoa').value) || 0;
var monthlyMaintenance = parseFloat(document.getElementById('maintenance').value) || 0;
var managementFeePercent = parseFloat(document.getElementById('managementFee').value) || 0;
// 2. Calculate Mortgage
var loanAmount = purchasePrice – downPayment;
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0 && loanTerm > 0) {
var monthlyRate = interestRate / 100 / 12;
var numberOfPayments = loanTerm * 12;
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 3. Calculate Monthly Expenses
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var monthlyVacancyCost = monthlyRent * (vacancyRate / 100);
var monthlyManagementCost = monthlyRent * (managementFeePercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyHOA + monthlyMaintenance + monthlyVacancyCost + monthlyManagementCost;
var totalMonthlyExpenses = totalOperatingExpenses + monthlyMortgage;
// 4. Calculate NOI and Cash Flow
var noi = (monthlyRent – monthlyVacancyCost) – (totalOperatingExpenses – monthlyVacancyCost);
// Note: NOI usually excludes debt service but includes vacancy. Formula: Gross Potential Income – Vacancy – Operating Expenses.
// Let's refine NOI: (Gross Rent – Vacancy Loss) – (Tax + Ins + HOA + Maint + Mgmt)
var effectiveGrossIncome = monthlyRent – monthlyVacancyCost;
var operatingExpensesOnly = monthlyTax + monthlyInsurance + monthlyHOA + monthlyMaintenance + monthlyManagementCost;
var noiCalc = effectiveGrossIncome – operatingExpensesOnly;
var monthlyCashFlow = noiCalc – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate Investment Totals
var totalCashInvested = downPayment + closingCosts + rehabCosts;
// 6. Calculate Returns
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
var totalCostBasis = purchasePrice + rehabCosts; // Cap rate usually based on current market value or cost basis
if (totalCostBasis > 0) {
capRate = ((noiCalc * 12) / totalCostBasis) * 100;
}
// 7. Format and Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resCashFlow').innerHTML = formatter.format(monthlyCashFlow);
document.getElementById('resCashFlow').className = 'result-value ' + (monthlyCashFlow >= 0 ? 'positive' : 'negative');
document.getElementById('resCoc').innerHTML = cashOnCash.toFixed(2) + '%';
document.getElementById('resCoc').className = 'result-value ' + (cashOnCash >= 0 ? 'positive' : 'negative');
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%';
document.getElementById('resTotalCash').innerHTML = formatter.format(totalCashInvested);
document.getElementById('resExpenses').innerHTML = formatter.format(totalMonthlyExpenses);
document.getElementById('resMortgage').innerHTML = formatter.format(monthlyMortgage);
document.getElementById('results-area').style.display = 'block';
}