Investing in real estate is one of the most reliable ways to build wealth, but it requires precise calculation. This Rental Property Cash Flow Calculator helps you determine whether a potential investment will generate positive income or become a financial liability.
Understanding the Key Metrics
When using this calculator, it is crucial to understand the four main output metrics:
Cash Flow: This is the profit you take home each month after all expenses (mortgage, taxes, insurance, repairs, vacancy) are paid. A positive cash flow ensures the property pays for itself.
Cash on Cash ROI: This measures the return on the actual cash you invested (down payment). For example, if you invest $50,000 and make $5,000 in annual profit, your Cash on Cash return is 10%.
Cap Rate (Capitalization Rate): This metric evaluates the profitability of the property regardless of financing. It is calculated by dividing the Net Operating Income (NOI) by the property's purchase price.
Operating Expenses: Many new investors underestimate expenses. This calculator factors in vacancy rates, repairs, and management fees to give you a realistic picture.
The 1% Rule and 50% Rule
Real estate investors often use "rules of thumb" to quickly filter deals before doing a deep dive with a calculator like this one.
The 1% Rule suggests that a property's monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for at least $2,000/month to be considered a strong cash flow candidate.
The 50% Rule estimates that 50% of your gross rental income will go toward operating expenses (excluding the mortgage). If a property rents for $2,000, expect $1,000 to go toward taxes, insurance, and repairs.
Why Cash Flow Matters More Than Appreciation
While property value appreciation is a nice bonus, it is speculative. Cash flow is factual. A property with strong cash flow provides financial security during market downturns because the rental income covers the debt service. Always prioritize positive monthly cash flow when evaluating a rental property purchase.
Example Calculation
Let's say you purchase a property for $250,000 with 20% down ($50,000). The loan amount is $200,000 at a 6.5% interest rate over 30 years.
Mortgage Payment: ~$1,264/month
Taxes & Insurance: ~$350/month
Repairs & Vacancy: ~$220/month
Total Rent: $2,200/month
In this scenario, after paying all expenses, you might see a net cash flow of roughly $366/month, resulting in a solid Cash on Cash ROI of roughly 8.8%. Use the calculator above to adjust these numbers for your specific market.
function calculateRental() {
// 1. Get Inputs using var
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPct = parseFloat(document.getElementById('downPaymentPct').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value);
var tax = parseFloat(document.getElementById('annualTax').value);
var insurance = parseFloat(document.getElementById('annualInsurance').value);
var repairPct = parseFloat(document.getElementById('repairCosts').value);
var mgmtPct = parseFloat(document.getElementById('mgmtFee').value);
// Validate inputs
if (isNaN(price) || isNaN(downPct) || isNaN(interestRate) || isNaN(term) || isNaN(rent)) {
alert("Please enter valid numbers for all fields.");
return;
}
// 2. Calculate Mortgage (Principal & Interest)
var downPaymentAmount = price * (downPct / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var numPayments = term * 12;
var monthlyPI = 0;
if (interestRate === 0) {
monthlyPI = loanAmount / numPayments;
} else {
monthlyPI = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
// 3. Calculate Monthly Expenses
var monthlyTax = tax / 12;
var monthlyIns = insurance / 12;
var vacancyCost = rent * (vacancyPct / 100);
var repairCost = rent * (repairPct / 100);
var mgmtCost = rent * (mgmtPct / 100);
var totalOperatingExpenses = monthlyTax + monthlyIns + vacancyCost + repairCost + mgmtCost;
var totalExpenses = totalOperatingExpenses + monthlyPI;
// 4. Calculate Returns
var grossIncome = rent; // Could adjust for vacancy here, but usually expenses line item is clearer
var netCashFlow = grossIncome – totalExpenses;
var annualCashFlow = netCashFlow * 12;
// Net Operating Income (NOI) = Income – Operating Expenses (Excluding Mortgage)
// Adjust income for vacancy for NOI calc usually:
var effectiveGrossIncome = rent – vacancyCost;
var noi = effectiveGrossIncome – (monthlyTax + monthlyIns + repairCost + mgmtCost);
var annualNOI = noi * 12;
var capRate = (annualNOI / price) * 100;
var cocROI = (annualCashFlow / downPaymentAmount) * 100;
// 5. Update DOM
document.getElementById('resGrossIncome').innerText = "$" + grossIncome.toFixed(2);
document.getElementById('resMortgage').innerText = "$" + monthlyPI.toFixed(2);
document.getElementById('resExpenses').innerText = "$" + totalOperatingExpenses.toFixed(2);
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerText = "$" + netCashFlow.toFixed(2);
if (netCashFlow >= 0) {
cashFlowEl.style.color = "#2f855a"; // Green
} else {
cashFlowEl.style.color = "#c53030"; // Red
}
document.getElementById('resCashInvested').innerText = "$" + downPaymentAmount.toFixed(2);
document.getElementById('resAnnualFlow').innerText = "$" + annualCashFlow.toFixed(2);
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cocROI.toFixed(2) + "%";
if (cocROI >= 0) {
cocEl.style.color = "#2f855a";
} else {
cocEl.style.color = "#c53030";
}
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
// Show results
document.getElementById('rpResults').style.display = "block";
}