Rental Property Cash Flow Calculator
Purchase & Loan Details
30 Years
15 Years
Income & Expenses (Monthly)
Monthly Analysis
Principal & Interest:
Total Monthly Expenses (inc. Vacancy/Maint):
Total Monthly Outflow:
Net Monthly Cash Flow:
Annual Cash Flow:
Cash on Cash Return (ROI):
Understanding Rental Property Cash Flow
Investing in real estate is a powerful way to build wealth, but the difference between a successful investment and a financial burden often comes down to one metric: Cash Flow. This Rental Property Cash Flow Calculator is designed to help investors objectively analyze the profitability of a potential real estate purchase by accounting for all income and expenses.
What is Cash Flow in Real Estate?
Cash flow is the net amount of money left over after all operating expenses and mortgage payments have been deducted from the rental income. A property with positive cash flow puts money in your pocket every month, while negative cash flow requires you to pay out of pocket to hold the asset.
The formula is simple but crucial:
Cash Flow = Gross Rental Income – (Operating Expenses + Debt Service)
Key Inputs Explained
- Purchase Price & Down Payment: These determine your loan amount. A higher down payment reduces your monthly mortgage but increases your initial capital investment.
- Vacancy Rate: No property is occupied 100% of the time. It is prudent to budget 5-10% of gross rent for periods between tenants.
- Maintenance & Repairs: Budgeting for future repairs (roof, HVAC, painting) is essential. Common practice is to set aside 5-10% of monthly rent.
- Cash on Cash Return (CoC): This metric measures the annual return on the actual cash you invested (down payment + closing costs), rather than the total loan amount. It allows you to compare real estate returns against other investment vehicles like stocks.
How to Improve Rental Cash Flow
If your calculation shows negative or low cash flow, consider these strategies:
- Negotiate the Price: Lowering the purchase price reduces the loan amount and monthly mortgage payments.
- Increase the Down Payment: Putting more cash down reduces debt service, though it lowers your leverage.
- Add Value: Cosmetic renovations can allow you to charge higher rent, increasing the top-line income.
- Shop for Insurance/Rates: Even a 0.5% difference in interest rates or cheaper insurance can significantly impact monthly margins.
Use this calculator as a preliminary screening tool. Always verify tax rates, HOA fees, and rental comparables in your specific local market before making an offer.