Investing in real estate is one of the most reliable ways to build wealth, but the success of an investment typically hinges on one critical metric: Cash Flow. This calculator helps you analyze a potential rental property deal to determine if it will generate income or drain your resources.
How This Calculator Works
To get an accurate picture of your investment returns, this tool breaks down the finances into three main categories:
Acquisition Costs: The purchase price, down payment, and closing costs determine your initial cash investment.
Operating Income: The total revenue generated from rent and other sources (like laundry or parking fees).
Operating Expenses & Debt Service: The costs to run the property (taxes, insurance, repairs) plus the mortgage payments.
Key Metrics Explained
1. Net Monthly Cash Flow
This is the money left in your pocket after all expenses and mortgage payments are made.
Formula: Total Income – Total Expenses – Debt Service
2. Net Operating Income (NOI)
NOI is the profitability of the property before factoring in the mortgage. It is essential for calculating the Cap Rate.
Formula: Total Income – Operating Expenses (excluding mortgage)
3. Cash on Cash Return (CoC)
This percentage tells you how hard your money is working. It compares your annual cash flow to the total cash you actually invested (Down Payment + Closing Costs).
Formula: (Annual Cash Flow / Total Cash Invested) × 100
Generally, a Cash on Cash return of 8-12% is considered good by many investors, though this varies by market.
4. Cap Rate (Capitalization Rate)
The Cap Rate measures the natural rate of return on the property assuming you paid all cash. It helps compare properties regardless of financing.
Formula: (Annual NOI / Purchase Price) × 100
Why You Should Account for "Invisible" Expenses
New investors often make the mistake of calculating cash flow by simply subtracting the mortgage from the rent. However, real estate has variable costs that must be accounted for:
Vacancy: Your property won't be rented 365 days a year. Budgeting 5-8% ensures you are covered during turnover periods.
Maintenance (CapEx): Roofs leak and water heaters break. Setting aside 5-10% of rent monthly creates a safety fund for these repairs.
Property Management: Even if you self-manage, you should account for your time or the future possibility of hiring a manager (typically 8-10% of rent).
Use the inputs above to stress-test your deal. What happens to your cash flow if the vacancy rate rises to 10%? What if interest rates go up? A conservative analysis is the key to safe investing.
function calculateRental() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var termYears = parseFloat(document.getElementById('loanTerm').value) || 0;
var monthlyRent = parseFloat(document.getElementById('rentalIncome').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var tax = parseFloat(document.getElementById('propertyTax').value) || 0;
var insurance = parseFloat(document.getElementById('insurance').value) || 0;
var hoa = parseFloat(document.getElementById('hoa').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenancePercent').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('vacancyPercent').value) || 0;
var mgmtPercent = parseFloat(document.getElementById('managementPercent').value) || 0;
// 2. Calculate Initial Investment
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var totalCashInvested = downPayment + closingCosts;
// 3. Calculate Mortgage Payment (P&I)
var monthlyRate = (interestRate / 100) / 12;
var numPayments = termYears * 12;
var mortgagePayment = 0;
if (loanAmount > 0 && interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
mortgagePayment = loanAmount / numPayments;
}
// 4. Calculate Variable Expenses
var totalMonthlyIncome = monthlyRent + otherIncome;
var maintCost = totalMonthlyIncome * (maintPercent / 100);
var vacancyCost = totalMonthlyIncome * (vacancyPercent / 100);
var mgmtCost = totalMonthlyIncome * (mgmtPercent / 100);
// 5. Calculate Totals
var totalOperatingExpenses = tax + insurance + hoa + maintCost + vacancyCost + mgmtCost;
var netOperatingIncome = totalMonthlyIncome – totalOperatingExpenses;
var monthlyCashFlow = netOperatingIncome – mortgagePayment;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = netOperatingIncome * 12;
// 6. Calculate Returns
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 7. Format Helper
function formatMoney(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
function formatPercent(num) {
return num.toFixed(2) + '%';
}
// 8. Display Results
document.getElementById('results').style.display = 'block';
var cfElement = document.getElementById('monthlyCashFlow');
cfElement.innerText = formatMoney(monthlyCashFlow);
if (monthlyCashFlow >= 0) {
cfElement.style.color = '#28a745';
} else {
cfElement.style.color = '#dc3545';
}
document.getElementById('noiResult').innerText = formatMoney(netOperatingIncome);
document.getElementById('mortgageResult').innerText = formatMoney(mortgagePayment);
document.getElementById('totalExpensesResult').innerText = formatMoney(totalOperatingExpenses + mortgagePayment); // Total expenses including debt
document.getElementById('cocResult').innerText = formatPercent(cashOnCash);
document.getElementById('capRateResult').innerText = formatPercent(capRate);
}