Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee a profit. To succeed, you must understand the numbers behind the deal. This Rental Property Cash Flow Calculator helps investors analyze the profitability of a potential purchase by accounting for income, operating expenses, and financing costs.
Why Cash Flow is King
Cash flow is the net amount of cash moving into or out of a business or investment. In real estate, positive cash flow means your rental income exceeds all your expenses (mortgage, taxes, insurance, repairs). This "passive income" provides financial stability and funding for future investments.
Negative cash flow implies you are losing money every month to hold the property. While some investors accept this in hopes of high appreciation, it is generally considered a higher-risk strategy.
Key Metrics Explained
Understanding the outputs of this calculator is crucial for making informed investment decisions:
Monthly Cash Flow: The profit left in your pocket every month after paying the mortgage and all operating costs.
NOI (Net Operating Income): Annual income minus annual operating expenses. Note that NOI does not include mortgage payments. This metric is used to determine the property's raw profitability.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price. It measures the rate of return on the property if you bought it all cash. It allows you to compare properties regardless of financing.
Cash on Cash (CoC) Return: Calculated as Annual Cash Flow / Total Cash Invested. This is arguably the most important metric for leveraged investors, as it tells you how hard your specific invested dollars are working.
Estimating Expenses Accurately
Novice investors often overestimate cash flow by ignoring hidden costs. This calculator accounts for the "Big 4" variable expenses that often catch owners off guard:
Vacancy: Properties won't be rented 365 days a year. Budgeting 5-8% allows for turnover periods.
Repairs & Maintenance: To fix leaky faucets, paint, or minor wear and tear.
CapEx (Capital Expenditures): Saving for big-ticket items like a new roof, HVAC, or water heater replacement (usually 5-10%).
Management Fees: Even if you self-manage now, budgeting 8-10% ensures the deal still works if you hire a property manager later.
How to Use This Calculator
Start by entering the purchase price and your loan details. Be realistic with your rental income estimates by checking comparable listings in the area (comps). Don't forget to include HOA fees if the property is in a community, as these can significantly eat into your profit margins. Adjust the vacancy and repair percentages based on the age and condition of the property.
function calculateCashFlow() {
// Get Inputs
var price = parseFloat(document.getElementById('propPrice').value) || 0;
var downPercent = parseFloat(document.getElementById('downPayment').value) || 0;
var rate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var taxYear = parseFloat(document.getElementById('annualTax').value) || 0;
var insYear = parseFloat(document.getElementById('annualIns').value) || 0;
var hoa = parseFloat(document.getElementById('hoaFee').value) || 0;
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value) || 0;
var repairPct = parseFloat(document.getElementById('repairRate').value) || 0;
var capexPct = parseFloat(document.getElementById('capexRate').value) || 0;
var mgmtPct = parseFloat(document.getElementById('mgmtRate').value) || 0;
// Validations
if (price <= 0 || years 0) {
cocReturn = (cashFlowYear / cashInvested) * 100;
} else if (cashInvested === 0 && cashFlowYear > 0) {
cocReturn = Infinity;
}
// Formatting Helper
function formatMoney(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
function formatPct(num) {
return num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
}
// Display Results
document.getElementById('res_pi').innerText = formatMoney(monthlyPI);
document.getElementById('res_total_exp').innerText = formatMoney(totalExpMo);
var cfEl = document.getElementById('res_cashflow');
cfEl.innerText = formatMoney(cashFlowMo);
if(cashFlowMo >= 0) {
cfEl.style.color = "#27ae60"; // Green
} else {
cfEl.style.color = "#c0392b"; // Red
}
document.getElementById('res_noi').innerText = formatMoney(noiYear);
document.getElementById('res_caprate').innerText = formatPct(capRate);
document.getElementById('res_coc').innerText = formatPct(cocReturn);
document.getElementById('resultsArea').style.display = 'block';
}