Understanding the Rental Property Cash Flow Calculator
Investing in real estate is one of the most reliable ways to build wealth, but the difference between a profitable investment and a financial burden lies in the math. This Rental Property Cash Flow Calculator is designed to help investors accurately predict the profitability of a potential real estate purchase.
Whether you are analyzing a long-term rental, a BRRRR strategy, or a turnkey property, understanding your metrics is crucial. This tool breaks down your income, operating expenses, and debt service to reveal the true monthly profit.
Key Metrics Explained
1. Monthly Cash Flow
Cash flow is the net amount of money left over after all expenses are paid. It is calculated as:
Gross Income (Rent) minus Vacancy Allowance
Minus Operating Expenses (Taxes, Insurance, HOA, Maintenance)
Minus Debt Service (Mortgage Principal & Interest)
Positive cash flow means the property pays for itself and provides you with income. Negative cash flow implies you must pay out of pocket to keep the property running.
2. Net Operating Income (NOI)
NOI is a critical metric used to determine the profitability of income-generating real estate properties before financing costs. It represents the income left after operating expenses are deducted but before mortgage payments are made. This figure is essential for calculating the Cap Rate.
3. Cash on Cash Return (CoC)
This is arguably the most important metric for ROI in real estate. It measures the annual cash flow relative to the total amount of cash you actually invested (Down Payment + Closing Costs + Rehab Costs). A CoC return of 8-12% is often considered a solid benchmark for rental properties, though this varies by market.
How to Calculate Rental Property Profitability
To use this calculator effectively, ensure you input realistic numbers:
Vacancy Rate: No property is occupied 100% of the time. A standard conservative estimate is 5-8% (about 2-4 weeks of vacancy per year).
Maintenance & CapEx: Budget for repairs. Setting aside 10-15% of the monthly rent for future repairs (Capital Expenditures like a new roof or HVAC) prevents cash flow shock later.
Property Management: Even if you self-manage now, it is wise to calculate the numbers assuming a property manager (usually 10% of rent) to ensure the deal works as a passive investment.
By adjusting the Purchase Price, Down Payment, and Interest Rate fields above, you can determine exactly what offer price makes sense to achieve your target Cash on Cash return.
function calculateCashFlow() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPaymentPercent = parseFloat(document.getElementById('downPayment').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseFloat(document.getElementById('loanTerm').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var propertyTaxYearly = parseFloat(document.getElementById('propertyTax').value);
var insuranceYearly = parseFloat(document.getElementById('insurance').value);
var hoaMonthly = parseFloat(document.getElementById('hoa').value);
var maintenanceMonthly = parseFloat(document.getElementById('maintenance').value);
// Validation
if (isNaN(purchasePrice) || isNaN(monthlyRent) || isNaN(interestRate)) {
alert("Please enter valid numbers for Price, Rent, and Interest Rate.");
return;
}
// 2. Calculate Mortgage (Principal & Interest)
// Loan Amount
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
// Monthly Rate
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mortgagePayment = 0;
if (interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
mortgagePayment = loanAmount / numberOfPayments;
}
// 3. Calculate Monthly Expenses
var vacancyCost = monthlyRent * (vacancyRate / 100);
var taxMonthly = propertyTaxYearly / 12;
var insuranceMonthly = insuranceYearly / 12;
var operatingExpenses = taxMonthly + insuranceMonthly + hoaMonthly + maintenanceMonthly + vacancyCost;
var totalExpenses = operatingExpenses + mortgagePayment;
// 4. Calculate Key Metrics
// NOI = Income – Operating Expenses (excluding mortgage)
var netOperatingIncome = monthlyRent – operatingExpenses;
// Cash Flow = NOI – Mortgage
var monthlyCashFlow = netOperatingIncome – mortgagePayment;
var annualCashFlow = monthlyCashFlow * 12;
// Cash Invested
var totalCashInvested = downPaymentAmount + closingCosts;
// Cash on Cash Return
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate = (Annual NOI / Purchase Price) * 100
var annualNOI = netOperatingIncome * 12;
var capRate = (annualNOI / purchasePrice) * 100;
// 5. Display Results
var resultContainer = document.getElementById('calc-results');
resultContainer.style.display = 'block';
// Helper for formatting currency
function formatMoney(num) {
return '$' + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
// Helper for formatting percent
function formatPercent(num) {
return num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
}
document.getElementById('res-noi').innerHTML = formatMoney(netOperatingIncome);
document.getElementById('res-mortgage').innerHTML = formatMoney(mortgagePayment);
document.getElementById('res-expenses').innerHTML = formatMoney(totalExpenses); // Includes mortgage
var cfElement = document.getElementById('res-cashflow');
cfElement.innerHTML = formatMoney(monthlyCashFlow);
if(monthlyCashFlow < 0) {
cfElement.classList.add('negative');
} else {
cfElement.classList.remove('negative');
}
var cocElement = document.getElementById('res-coc');
cocElement.innerHTML = formatPercent(cocReturn);
if(cocReturn < 0) {
cocElement.classList.add('negative');
} else {
cocElement.classList.remove('negative');
}
document.getElementById('res-caprate').innerHTML = formatPercent(capRate);
}