function calculateRentalROI() {
// Get input values
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var ops = parseFloat(document.getElementById('monthlyExpenses').value);
// Validate inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(term) || isNaN(rent) || isNaN(ops)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Mortgage Calculation (Principal and Interest)
var principal = price – down;
var monthlyRate = rate / 100 / 12;
var numPayments = term * 12;
var mortgage = 0;
if (rate === 0) {
mortgage = principal / numPayments;
} else {
mortgage = principal * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
// Total Expenses
var totalMonthlyExpenses = mortgage + ops;
// Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Cash on Cash Return
// CoC = Annual Cash Flow / Total Cash Invested (assuming Down Payment is total investment for simplicity)
var cocReturn = 0;
if (down > 0) {
cocReturn = (annualCashFlow / down) * 100;
}
// Display Results
document.getElementById('rpResults').style.display = 'block';
document.getElementById('resMortgage').innerText = '$' + mortgage.toFixed(2);
document.getElementById('resTotalExp').innerText = '$' + totalMonthlyExpenses.toFixed(2);
var cfEl = document.getElementById('resMonthlyCF');
cfEl.innerText = '$' + monthlyCashFlow.toFixed(2);
cfEl.className = 'rp-result-value ' + (monthlyCashFlow >= 0 ? 'rp-positive' : 'rp-negative');
var acfEl = document.getElementById('resAnnualCF');
acfEl.innerText = '$' + annualCashFlow.toFixed(2);
acfEl.className = 'rp-result-value ' + (annualCashFlow >= 0 ? 'rp-positive' : 'rp-negative');
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cocReturn.toFixed(2) + '%';
cocEl.className = 'rp-result-value ' + (cocReturn >= 0 ? 'rp-positive' : 'rp-negative');
}
Understanding Rental Property Cash Flow
Calculating the potential return on a rental property is the first step in successful real estate investing. This Rental Property Cash Flow Calculator helps you determine whether a property will generate positive income or cost you money every month.
What is Cash Flow?
Cash flow is the net amount of cash moving into or out of your rental business. It is calculated by taking your total monthly rental income and subtracting all monthly expenses, including the mortgage payment (principal and interest), taxes, insurance, and operating costs like repairs and HOA fees. Positive cash flow means the property is generating income, while negative cash flow means you are losing money on the asset.
Key Metrics Explained
Monthly Mortgage (P&I): This is the cost of borrowing money. It is determined by your loan amount (Purchase Price minus Down Payment), interest rate, and loan term.
Operating Expenses: These are the necessary costs to keep the property running. Common oversights include vacancy rates (periods where the property has no tenant), maintenance reserves, and property management fees.
Cash on Cash Return (CoC): This is arguably the most important metric for ROI. It measures the annual cash flow relative to the actual cash you invested (Down Payment). A CoC return of 8-12% is generally considered a solid investment in many markets.
The 1% Rule
A common "rule of thumb" in real estate is the 1% rule. It suggests that for a property to be cash flow positive, the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for $2,000/month. While this calculator provides exact figures based on your inputs, the 1% rule serves as a quick initial filter when screening properties.