Rental Property Cash Flow Calculator
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Rental Property Cash Flow Calculator
Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any rental property investment. It represents the net amount of money left in your pocket after all expenses, mortgage payments, and reserves are paid from the rental income. A positive cash flow ensures that the property pays for itself and generates profit, while a negative cash flow means you are losing money every month to hold the asset.
How to Calculate Rental Cash Flow
To accurately calculate the cash flow for a rental property, you must take a granular look at both income and expenses. The formula is conceptually simple but requires detail to be accurate:
Cash Flow = Gross Income – (Operating Expenses + Debt Service)
1. Gross Income
This includes your monthly rent plus any additional income streams from the property, such as laundry facilities, parking fees, or pet rent. However, seasoned investors always account for a vacancy rate—the percentage of time the property sits empty between tenants.
2. Operating Expenses
Operating expenses are the costs required to keep the property running. Common oversights in this category include:
- Property Management: Even if you self-manage, it is wise to factor in a 8-10% fee to account for your time or future management needs.
- Maintenance & Repairs: Budgeting 5-10% of the rent for routine fixes (leaky faucets, painting) is essential.
- CapEx (Capital Expenditures): This is a reserve fund for big-ticket items like a new roof, HVAC system, or water heater replacement.
- Taxes & Insurance: These are fixed annual costs that should be broken down into monthly amounts.
3. Debt Service
This is your mortgage principal and interest payment. Note that while the principal paydown builds equity (wealth), it is still a cash outflow that reduces your monthly liquid cash flow.
What is a Good Cash Flow?
The definition of "good" cash flow varies by investor strategy and market. However, a common benchmark is the $100-$200 per door rule, meaning each unit should net at least that amount monthly after all expenses and reserves.
Another metric to consider is Cash-on-Cash Return, which measures your annual cash flow against the total cash invested (down payment + closing costs + rehab). A Cash-on-Cash return of 8-12% is often considered a solid target for rental real estate.
Use the calculator above to run scenarios on potential properties. Adjust variables like the vacancy rate or maintenance budget to see how sensitive your investment is to unexpected costs. Conservative estimates lead to safer investments.
function calculateCashFlow() {
// Get input values
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var mortgagePayment = parseFloat(document.getElementById('mortgagePayment').value) || 0;
var propertyTaxAnnual = parseFloat(document.getElementById('propertyTax').value) || 0;
var insuranceAnnual = parseFloat(document.getElementById('insurance').value) || 0;
var hoaFee = parseFloat(document.getElementById('hoaFee').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value) || 0;
var managementRate = parseFloat(document.getElementById('managementFee').value) || 0;
var capex = parseFloat(document.getElementById('capex').value) || 0;
// Calculate Gross Potential Income
var grossPotentialIncome = monthlyRent + otherIncome;
// Calculate Vacancy Loss
var vacancyLoss = grossPotentialIncome * (vacancyRate / 100);
// Effective Gross Income
var effectiveGrossIncome = grossPotentialIncome – vacancyLoss;
// Calculate Variable Expenses based on percentage of Rent (usually base rent, sometimes gross)
// Here we use Gross Potential Income for percentage calculations as is standard
var maintenanceCost = grossPotentialIncome * (maintenanceRate / 100);
var managementCost = grossPotentialIncome * (managementRate / 100);
// Calculate Fixed Monthly Expenses
var propertyTaxMonthly = propertyTaxAnnual / 12;
var insuranceMonthly = insuranceAnnual / 12;
// Total Operating Expenses (Excluding Mortgage)
var totalOperatingExpenses =
propertyTaxMonthly +
insuranceMonthly +
hoaFee +
maintenanceCost +
managementCost +
capex;
// Net Operating Income (NOI)
var noi = effectiveGrossIncome – totalOperatingExpenses;
// Total Monthly Expenses (Operating + Debt Service)
var totalExpenses = totalOperatingExpenses + mortgagePayment + vacancyLoss;
// Note: Vacancy is usually a deduction from income, but for "total money out/lost" visualization we track it.
// However, for pure Cash Flow formula: Cash Flow = Effective Income – Operating Expenses – Debt.
var cashFlow = noi – mortgagePayment;
var annualCashFlow = cashFlow * 12;
// Update UI
document.getElementById('resGrossIncome').innerText = '$' + grossPotentialIncome.toFixed(2);
document.getElementById('resVacancy').innerText = '-$' + vacancyLoss.toFixed(2);
// For display, "Total Expenses" usually includes the mortgage and operating costs
var displayTotalExpenses = totalOperatingExpenses + mortgagePayment;
document.getElementById('resExpenses').innerText = '-$' + displayTotalExpenses.toFixed(2);
document.getElementById('resNOI').innerText = '$' + noi.toFixed(2);
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerText = '$' + cashFlow.toFixed(2);
if (cashFlow >= 0) {
cashFlowEl.style.color = '#27ae60';
} else {
cashFlowEl.style.color = '#c0392b';
}
var annualEl = document.getElementById('resAnnualCashFlow');
annualEl.innerText = '$' + annualCashFlow.toFixed(2);
if (annualCashFlow >= 0) {
annualEl.style.color = '#27ae60';
} else {
annualEl.style.color = '#c0392b';
}
// Show results
document.getElementById('results').style.display = 'block';
}