Rental Property Cash Flow Calculator
Income
Recurring Expenses
Variable Expenses & Reserves
Gross Monthly Income:
$0.00
Total Monthly Expenses:
$0.00
Net Operating Income (NOI):
$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Mastering Rental Property Cash Flow Analysis
Understanding the financial performance of your real estate investment is crucial for long-term success. A rental property cash flow calculator is the most effective tool for determining whether a potential investment will generate a profit or become a financial burden. Cash flow is simply the money left over after all expenses have been paid from the income generated by the property.
How to Calculate Rental Cash Flow
The formula for calculating rental property cash flow is straightforward, yet it requires precision in estimating expenses. The basic equation is:
Cash Flow = Gross Income – Total Expenses
To get an accurate figure, you must account for all categories of outflows:
- Gross Income: The total rent collected plus any additional income sources like parking fees, laundry machines, or pet rent.
- Operating Expenses: Costs required to run the property, including property management fees, repairs, maintenance, utilities, property taxes, insurance, and HOA fees.
- Debt Service: The principal and interest payments on your mortgage.
- Reserves: Money set aside for vacancy losses and capital expenditures (CapEx) like replacing a roof or HVAC system.
Understanding the Inputs
Many novice investors make the mistake of only subtracting the mortgage from the rent to determine profit. This calculator forces you to consider the "silent killers" of cash flow:
- Vacancy Rate: Properties are rarely occupied 365 days a year. A standard conservative estimate is 5% to 8%, representing the time the unit sits empty between tenants.
- Management Fee: Even if you plan to self-manage, you should account for your time or the future possibility of hiring a property manager (typically 8-10% of monthly rent).
- Maintenance & CapEx: Budgeting 5-10% of rent for repairs and another 5-10% for big-ticket items ensures you aren't surprised by large bills later.
Interpreting Your Results
Once you have run the numbers, how do you know if it is a good deal?
- Positive Cash Flow: If the result is positive, the property pays for itself and provides passive income. Most investors aim for at least $100-$200 per door per month in pure cash flow.
- Negative Cash Flow: If the result is negative, you are losing money every month to hold the property. Unless you are banking on significant appreciation or have a specific tax strategy, negative cash flow properties are generally considered risky investments.
Use this calculator to analyze multiple scenarios by adjusting the rent price or negotiating a lower purchase price to reduce your mortgage payments, ensuring your investment meets your financial goals.