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What is Rental Property Cash Flow?
Cash flow is the lifeblood of any rental real estate investment. It represents the net amount of money left in your pocket at the end of every month after all operating expenses and mortgage payments have been made. A positive cash flow indicates that the property is generating income, while a negative cash flow means the property is costing you money to hold.
Successful real estate investors use cash flow analysis to determine the viability of a deal before purchasing. By estimating income (rent) and deducting all potential expenses (vacancy, repairs, management, taxes, insurance, and debt service), you can predict the profitability of an investment.
How to Use This Calculator
This calculator is designed to provide a comprehensive analysis of a potential rental property. Here is how to input your data correctly:
1. Purchase Information
Enter the Purchase Price agreed upon with the seller. The Down Payment is the cash you put down upfront. Closing Costs typically range from 2-5% of the purchase price, and Rehab Costs are immediate repairs needed to make the property rent-ready.
2. Loan Details
Input your Interest Rate and Loan Term (usually 30 years). These determine your monthly principal and interest payment.
3. Monthly Expenses & Reserves
It is critical not to underestimate expenses. This calculator includes fields for:
- Vacancy Rate: The percentage of time the property sits empty. 5-8% is a standard conservative estimate.
- Management Fee: If you hire a property manager, they typically charge 8-10% of the monthly rent.
- Maintenance/CapEx: Funds set aside for future repairs (e.g., roof, HVAC) and routine maintenance. 5-10% is recommended.
Understanding the Key Metrics
Cash on Cash Return (CoC)
This metric measures the annual return on the actual cash you invested, rather than the total loan amount. It is calculated as:
(Annual Cash Flow / Total Cash Invested) × 100
A "good" CoC return varies by investor strategy, but many target 8-12% or higher.
Net Operating Income (NOI)
NOI calculates the profitability of the property excluding the mortgage payments. It is simply Total Income minus Operating Expenses. Lenders often look at this number to determine the property's ability to service debt.
Cap Rate (Capitalization Rate)
Cap Rate measures the natural rate of return on the property if it were bought entirely with cash. It allows you to compare different properties irrespective of financing.
(Annual NOI / Purchase Price) × 100
Why Calculation Accuracy Matters
New investors often make the mistake of calculating cash flow based only on Rent minus Mortgage. This "napkin math" ignores the inevitability of vacancies, repairs, and capital expenditures. By accounting for these hidden costs using the variables above, this calculator provides a realistic view of the asset's performance, helping you avoid bad investments and build a sustainable portfolio.
function calculateCashFlow() {
// 1. Get Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').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 rentalIncome = parseFloat(document.getElementById('rentalIncome').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var propertyTaxAnnual = parseFloat(document.getElementById('propertyTax').value) || 0;
var insuranceAnnual = parseFloat(document.getElementById('insurance').value) || 0;
var hoaFee = parseFloat(document.getElementById('hoaFee').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var managementFeePercent = parseFloat(document.getElementById('managementFee').value) || 0;
var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value) || 0;
// 2. Calculate Mortgage (Principal & Interest)
var loanAmount = purchasePrice – downPayment;
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var mortgagePayment = 0;
if (loanAmount > 0 && interestRate > 0) {
mortgagePayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
}
// 3. Calculate Income
var totalMonthlyIncome = rentalIncome + otherIncome;
// 4. Calculate Variable Expenses
var vacancyCost = totalMonthlyIncome * (vacancyRate / 100);
var managementCost = totalMonthlyIncome * (managementFeePercent / 100);
var maintenanceCost = totalMonthlyIncome * (maintenanceRate / 100);
// 5. Calculate Total Monthly Expenses
var propertyTaxMonthly = propertyTaxAnnual / 12;
var insuranceMonthly = insuranceAnnual / 12;
var operatingExpenses = propertyTaxMonthly + insuranceMonthly + hoaFee + vacancyCost + managementCost + maintenanceCost;
var totalExpenses = operatingExpenses + mortgagePayment;
// 6. Calculate Cash Flow
var monthlyCashFlow = totalMonthlyIncome – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 7. Calculate NOI (Net Operating Income)
// NOI = Income – Operating Expenses (Excluding Mortgage)
var monthlyNOI = totalMonthlyIncome – operatingExpenses;
var annualNOI = monthlyNOI * 12;
// 8. Calculate Cash on Cash Return
// Total Invested = Down Payment + Closing Costs + Rehab
var totalInvested = downPayment + closingCosts + rehabCosts;
var cocReturn = 0;
if (totalInvested > 0) {
cocReturn = (annualCashFlow / totalInvested) * 100;
}
// 9. Calculate Cap Rate
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// 10. Display Results
// Helper for currency formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('resTotalIncome').innerText = formatter.format(totalMonthlyIncome);
document.getElementById('resMortgage').innerText = "(" + formatter.format(mortgagePayment) + ")";
document.getElementById('resExpenses').innerText = "(" + formatter.format(operatingExpenses) + ")";
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = formatter.format(monthlyCashFlow);
// Style Cash Flow Red/Green
if (monthlyCashFlow >= 0) {
document.getElementById('cashFlowRow').classList.remove('negative');
document.getElementById('cashFlowRow').style.color = "#27ae60";
} else {
document.getElementById('cashFlowRow').classList.add('negative');
document.getElementById('cashFlowRow').style.color = "#c0392b";
}
document.getElementById('resNOI').innerText = formatter.format(annualNOI);
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
document.getElementById('resTotalInvested').innerText = formatter.format(totalInvested);
// Show results area
document.getElementById('resultsArea').style.display = 'block';
}