* Closing costs are estimated at 3% of purchase price for Cash on Cash calculation.
Understanding Rental Property Profitability
Investing in real estate is a powerful way to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must analyze the numbers carefully. This Rental Property Cash Flow Calculator helps you determine if a potential deal is an asset or a liability.
Key Metrics Explained
Cash Flow: This is the net amount of money moving in or out of the investment each month. Positive cash flow means the rent covers the mortgage and all expenses with money left over.
Net Operating Income (NOI): A critical metric in real estate, NOI is calculated by subtracting all operating expenses from the revenue generated by the property. Note that NOI excludes mortgage payments and capital expenditures.
Cap Rate (Capitalization Rate): Calculated as NOI / Purchase Price. This percentage helps compare the profitability of different properties regardless of how they are financed. A higher Cap Rate generally indicates a better return, though often with higher risk.
Cash on Cash Return: This measures the annual return on the actual cash you invested (Down Payment + Closing Costs). It is arguably the most important metric for investors using leverage (mortgages).
How to Analyze a Deal
When using this calculator, ensure you account for "hidden" costs. Many new investors forget to include Vacancy Rates (money lost when the unit is empty) or Maintenance reserves (saving for a new roof or HVAC repair). A safe rule of thumb is to allocate at least 5-10% of rent for maintenance and 5% for vacancy.
Example Scenario
Consider a property purchased for $250,000 with a 20% down payment. If the property rents for $2,200/month and your total operating expenses (taxes, insurance, maintenance) are $600/month, plus a mortgage payment of roughly $1,264, your monthly cash flow would be approximately $336. This calculator performs this complex math instantly to help you make data-driven decisions.
function calculateRental() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPercent = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var termYears = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var annualTax = parseFloat(document.getElementById('propertyTax').value) || 0;
var annualIns = parseFloat(document.getElementById('annualInsurance').value) || 0;
var monthlyMaint = parseFloat(document.getElementById('monthlyMaintenance').value) || 0;
var monthlyHOA = parseFloat(document.getElementById('monthlyHOA').value) || 0;
var monthlyMgmt = parseFloat(document.getElementById('monthlyManagement').value) || 0;
// Mortgage Calculation
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var numPayments = termYears * 12;
var monthlyPI = 0;
if (interestRate > 0) {
monthlyPI = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
monthlyPI = loanAmount / numPayments;
}
// Operating Expenses Calculation
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var vacancyLoss = rent * (vacancyRate / 100);
var totalOperatingExpensesMonthly = monthlyTax + monthlyIns + monthlyMaint + monthlyHOA + monthlyMgmt + vacancyLoss;
var totalExpensesMonthly = totalOperatingExpensesMonthly + monthlyPI;
// Income Calculation
var effectiveGrossIncome = rent – vacancyLoss; // Some prefer deducting vacancy from income, others add to expense. Logic here treats it as expense reduction or cost. Let's use standard NOI math: Potential Gross – Vacancy = Effective Gross.
// Revised for NOI standard:
// NOI = (Rent – Vacancy Loss) – (Tax + Ins + Maint + HOA + Mgmt)
var effectiveIncome = rent – vacancyLoss;
var operatingExpensesOnly = monthlyTax + monthlyIns + monthlyMaint + monthlyHOA + monthlyMgmt; // Excluding vacancy from expenses here since it was deducted from income
var monthlyNOI = effectiveIncome – operatingExpensesOnly;
var annualNOI = monthlyNOI * 12;
// Cash Flow
var monthlyCashFlow = monthlyNOI – monthlyPI;
var annualCashFlow = monthlyCashFlow * 12;
// Returns
var capRate = (price > 0) ? (annualNOI / price) * 100 : 0;
// Cash on Cash: Total Cash Invested = Down Payment + Closing Costs (est 3% of price)
var closingCosts = price * 0.03;
var totalCashInvested = downPaymentAmount + closingCosts;
var cashOnCash = (totalCashInvested > 0) ? (annualCashFlow / totalCashInvested) * 100 : 0;
// Formatting Helper
function formatMoney(num) {
return '$' + num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
function formatPercent(num) {
return num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
}
// Output to DOM
document.getElementById('resPI').innerText = formatMoney(monthlyPI);
document.getElementById('resTotalExp').innerText = formatMoney(totalExpensesMonthly); // Here total expenses includes PI + OpEx + Vacancy loss technically represents money not received
document.getElementById('resNOI').innerText = formatMoney(annualNOI);
document.getElementById('resMonthlyCash').innerText = formatMoney(monthlyCashFlow);
document.getElementById('resAnnualCash').innerText = formatMoney(annualCashFlow);
var capElement = document.getElementById('resCapRate');
capElement.innerText = formatPercent(capRate);
capElement.style.color = capRate > 5 ? '#27ae60' : (capRate > 0 ? '#f39c12' : '#c0392b');
var cocElement = document.getElementById('resCOC');
cocElement.innerText = formatPercent(cashOnCash);
cocElement.style.color = cashOnCash > 8 ? '#27ae60' : (cashOnCash > 0 ? '#f39c12' : '#c0392b');
}
// Run on load to show initial values
window.onload = calculateRental;