Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee profit. To succeed, investors must rigorously analyze the numbers. This Rental Property Cash Flow Calculator is designed to help you determine the viability of a potential investment by breaking down income, expenses, and return metrics.
Why Cash Flow is King
Cash flow is the net amount of cash moving into and out of a business. 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 money for future investments.
Negative cash flow implies you are losing money every month to hold the property. While some investors accept this banking on future appreciation, it is a risky strategy. Most seasoned investors prioritize immediate positive cash flow.
Understanding Key ROI Metrics
Our calculator provides several critical metrics to evaluate your deal:
Cash on Cash Return (CoC ROI): This measures the annual return on the actual cash you invested (down payment + closing costs). It is calculated as (Annual Cash Flow / Total Cash Invested) x 100. A CoC return of 8-12% is often considered a solid benchmark for rental properties.
Cap Rate (Capitalization Rate): This metric helps you compare the profitability of different properties regardless of how they are financed. It is calculated as (Net Operating Income / Purchase Price) x 100. It represents the potential return if you paid all cash.
Net Operating Income (NOI): This is your total revenue minus all necessary operating expenses, excluding mortgage payments. It is a pure measure of the property's ability to generate revenue.
Accounting for "Hidden" Expenses
Novice investors often underestimate expenses. It is crucial to factor in:
Vacancy Rate: Properties won't be occupied 100% of the time. Budgeting 5-10% of rent for vacancy ensures you have a buffer during turnover periods.
Maintenance & CapEx: Roofs leak and toilets break. Setting aside money monthly (e.g., $100-$200 or 10% of rent) prevents a single repair from wiping out your annual profit.
Property Management: Even if you self-manage now, financing institutions often factor in a management fee (typically 8-10%) when evaluating the asset.
How to Improve Your ROI
If the numbers on the calculator don't look promising, consider these adjustments:
Negotiate the Price: lowering the purchase price immediately boosts equity and reduces loan payments.
Increase Rent: Can minor cosmetic upgrades justify a higher monthly rent?
Shop for Financing: A lower interest rate or a longer loan term (amortization) can significantly lower monthly obligations and improve cash flow.
function calculateROI() {
// 1. Get Inputs and validate
var price = parseFloat(document.getElementById('purchase_price').value);
var down = parseFloat(document.getElementById('down_payment').value);
var rate = parseFloat(document.getElementById('interest_rate').value);
var years = parseFloat(document.getElementById('loan_years').value);
var rent = parseFloat(document.getElementById('monthly_rent').value);
var taxYear = parseFloat(document.getElementById('prop_tax').value);
var insYear = parseFloat(document.getElementById('insurance').value);
var hoa = parseFloat(document.getElementById('hoa').value);
var maint = parseFloat(document.getElementById('maintenance').value);
var vacancyRate = parseFloat(document.getElementById('vacancy').value);
// Validation to prevent NaN errors
if (isNaN(price) || price < 0) price = 0;
if (isNaN(down) || down < 0) down = 0;
if (isNaN(rate) || rate < 0) rate = 0;
if (isNaN(years) || years <= 0) years = 1;
if (isNaN(rent) || rent < 0) rent = 0;
if (isNaN(taxYear) || taxYear < 0) taxYear = 0;
if (isNaN(insYear) || insYear < 0) insYear = 0;
if (isNaN(hoa) || hoa < 0) hoa = 0;
if (isNaN(maint) || maint < 0) maint = 0;
if (isNaN(vacancyRate) || vacancyRate 0) {
capRate = (annualNOI / price) * 100;
}
// Cash on Cash Return = (Annual Cash Flow / Total Cash Invested) * 100
// For simplicity, assuming Total Cash Invested = Down Payment + (Closing costs assumed 0 for basic calc or included in down)
// If down payment is 0, handle infinity
var cashOnCash = 0;
if (down > 0) {
cashOnCash = (annualCashFlow / down) * 100;
} else if (down === 0 && annualCashFlow > 0) {
cashOnCash = 999.99; // Infinite return technically
}
// 5. Update UI
// Helper for currency formatting
var fmtMoney = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
// Helper for percentage formatting
function fmtPct(val) {
return val.toFixed(2) + "%";
}
document.getElementById('res_cashflow').innerHTML = fmtMoney.format(monthlyCashFlow);
// Color coding cash flow
var cfEl = document.getElementById('res_cashflow');
if(monthlyCashFlow >= 0) {
cfEl.style.color = "#2f855a"; // Green
} else {
cfEl.style.color = "#c53030"; // Red
}
document.getElementById('res_coc').innerHTML = fmtPct(cashOnCash);
document.getElementById('res_cap').innerHTML = fmtPct(capRate);
document.getElementById('res_noi').innerHTML = fmtMoney.format(annualNOI);
document.getElementById('res_mortgage').innerHTML = fmtMoney.format(mortgagePayment);
document.getElementById('res_expenses').innerHTML = fmtMoney.format(totalMonthlyOutflow); // Showing total outflow including mortgage usually more helpful for beginners, or just OpEx. Label says "Total Monthly Expenses". Let's use total outflow to match the cashflow calculation logic clearly.
document.getElementById('res_investment').innerHTML = fmtMoney.format(down);
}
// Run calculation once on load to show default values
window.onload = function() {
calculateROI();
};