Rental Property Cash Flow Calculator
Analysis Results
Understanding the Rental Property Cash Flow Calculator
Real estate investing is a numbers game. Whether you are analyzing a single-family home or a multi-unit property, the difference between a profitable asset and a financial burden lies in the math. This Rental Property Cash Flow Calculator helps investors accurately determine the potential profitability of an investment by accounting for all major variables including financing, vacancies, and maintenance.
What is Monthly Cash Flow?
Monthly cash flow is the net profit you pocket every month after all operating expenses and mortgage payments are paid. It is the lifeblood of a rental business. The formula used in this calculator is:
Cash Flow = Gross Rental Income – (Mortgage Payment + Operating Expenses)
Positive cash flow means the property pays for itself and generates income. Negative cash flow implies you must contribute money from your own pocket to keep the property running.
Key Inputs Explained
- Vacancy Rate: No property is rented 100% of the time. A safe estimate is usually 5% to 8%, representing the time the property sits empty between tenants.
- Maintenance & CapEx: Things break. Smart investors set aside a percentage of the rent (typically 5-10%) for repairs and Capital Expenditures (replacing a roof or HVAC).
- Closing Costs: These are fees paid at the closing of a real estate transaction, typically ranging from 2% to 5% of the purchase price.
What is Cash-on-Cash Return?
While cash flow tells you the dollar amount you make, Cash-on-Cash (CoC) Return tells you how hard your money is working. It measures the annual return on the actual cash you invested, not the total loan amount.
For example, if you invest $50,000 cash (down payment + closing costs) and the property generates $5,000 in positive cash flow per year, your CoC return is 10%.
Example Calculation
Imagine purchasing a property for $250,000 with 20% down.
Total Cash Invested: $50,000 (Down Payment) + $5,000 (Closing Costs) = $55,000.
If the property rents for $2,200/mo and your total expenses (mortgage + taxes + insurance + reserves) are $1,800/mo, your net cash flow is $400/mo ($4,800/year).
Your Cash-on-Cash Return would be: $4,800 / $55,000 = 8.72%.