Rental Property Cash Flow Calculator
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Understanding Rental Property Cash Flow
Calculating cash flow is the single most important step in analyzing a potential real estate investment. Positive cash flow ensures that the property pays for itself while building equity, whereas negative cash flow can quickly drain your reserves. This Rental Property Cash Flow Calculator helps investors determine the viability of a deal by factoring in income, mortgage costs, and operating expenses.
How the Numbers Are Calculated
Real estate analysis involves several key metrics that tell different parts of the financial story:
- Net Monthly Cash Flow: This is your "take-home" profit after all expenses. It is calculated as Monthly Rent – (Mortgage Payment + Taxes + Insurance + Maintenance). Ideally, this number should be positive.
- Cash on Cash Return (CoC): This measures the return on the actual cash you invested (down payment + closing costs). It is a superior metric to ROI for leveraged investments because it tells you how hard your specific dollars are working.
- Cap Rate (Capitalization Rate): This represents the return on the property if you bought it in all cash. It allows you to compare the profitability of different properties regardless of financing.
What is a "Good" Cash on Cash Return?
While target returns vary by investor strategy and market location, a common benchmark for residential rental properties is a 8% to 12% Cash on Cash return. In highly appreciative markets (like coastal cities), investors might accept a lower cash flow (4-6%) in exchange for future equity growth. Conversely, in stable Midwest markets, investors often seek higher immediate cash flow (12%+).
Common Expenses Investors Overlook
When using the calculator above, ensure you aren't underestimating expenses. Common pitfalls include:
- Vacancy Rates: Properties won't be occupied 365 days a year. It is prudent to set aside 5-8% of rent for vacancies.
- CapEx (Capital Expenditures): Big-ticket items like roofs, HVAC systems, and water heaters eventually break. Allocating reserves for these future costs is critical for long-term accuracy.
- Property Management: Even if you plan to self-manage, analyzing the deal with a management fee (usually 8-10%) ensures the numbers still work if you decide to hire a professional later.
Use our tool to simulate different scenarios—such as raising the rent or negotiating a lower purchase price—to see how sensitive your investment is to market changes.
function calculateRentalROI() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var downPaymentPercent = parseFloat(document.getElementById("downPaymentPercent").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var annualTaxes = parseFloat(document.getElementById("annualTaxes").value);
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value);
var monthlyMaintenance = parseFloat(document.getElementById("monthlyMaintenance").value);
// 2. Validate Inputs
if (isNaN(purchasePrice) || isNaN(downPaymentPercent) || isNaN(interestRate) ||
isNaN(loanTermYears) || isNaN(monthlyRent) || isNaN(annualTaxes) ||
isNaN(annualInsurance) || isNaN(monthlyMaintenance)) {
alert("Please fill in all fields with valid numbers before calculating.");
return;
}
// 3. Perform Calculations
// Mortgage Calculations
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = loanTermYears * 12;
// Monthly P&I (Principal & Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyPI = 0;
if (interestRate > 0) {
var x = Math.pow(1 + monthlyRate, totalPayments);
monthlyPI = (loanAmount * x * monthlyRate) / (x – 1);
} else {
monthlyPI = loanAmount / totalPayments;
}
// Monthly Expenses Calculation
var monthlyTaxes = annualTaxes / 12;
var monthlyInsurance = annualInsurance / 12;
var totalMonthlyExpenses = monthlyPI + monthlyTaxes + monthlyInsurance + monthlyMaintenance;
// Cash Flow Calculation
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Cash on Cash Return Calculation
// CoC = Annual Pre-Tax Cash Flow / Total Cash Invested
// Note: For simplicity, we assume Cash Invested = Down Payment.
// In reality, it includes closing costs and rehab, but we'll stick to inputs provided.
var cashOnCash = 0;
if (downPaymentAmount > 0) {
cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
}
// Cap Rate Calculation
// NOI (Net Operating Income) = (Monthly Rent * 12) – (Operating Expenses Annually)
// Operating Expenses do NOT include mortgage (P&I). They DO include taxes, insurance, maintenance.
var annualOperatingExpenses = annualTaxes + annualInsurance + (monthlyMaintenance * 12);
var annualNOI = (monthlyRent * 12) – annualOperatingExpenses;
var capRate = (annualNOI / purchasePrice) * 100;
// 4. Update UI
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById("displayLoanAmount").innerText = formatter.format(loanAmount);
document.getElementById("displayMonthlyPI").innerText = formatter.format(monthlyPI);
document.getElementById("displayTotalExpenses").innerText = formatter.format(totalMonthlyExpenses);
var cfElement = document.getElementById("displayCashFlow");
cfElement.innerText = formatter.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cfElement.className = "result-value positive";
} else {
cfElement.className = "result-value negative";
}
document.getElementById("displayCoC").innerText = cashOnCash.toFixed(2) + "%";
document.getElementById("displayCapRate").innerText = capRate.toFixed(2) + "%";
// Show results
document.getElementById("resultsSection").style.display = "block";
}