Rental Property Cash Flow Calculator
Analyze the potential profitability of your real estate investment.
Purchase & Loan Details
Income & Expenses
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Monthly Cash Flow
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Cash on Cash Return
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Cap Rate
Monthly Principal & Interest:
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Total Monthly Expenses (Operating + Vacancy):
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Net Operating Income (NOI) / Month:
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Total Cash Needed to Close:
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Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good deal. The difference between a profitable asset and a financial burden lies in the numbers. This Rental Property Cash Flow Calculator is designed to help investors objectively analyze the financial performance of a potential rental property.
What is Cash Flow?
Cash flow is the net amount of money moving in and out of your investment each month. In real estate, it is calculated by taking your total income (rent) and subtracting all expenses (mortgage, taxes, insurance, maintenance, vacancy, and management fees). Positive cash flow means the property is putting money into your pocket every month, while negative cash flow means you are paying to hold the property.
Key Metrics Explained
- Net Operating Income (NOI): This is your profitability before paying the mortgage. It is calculated as Gross Income minus Operating Expenses. It measures the potential of the asset itself, regardless of financing.
- Cash on Cash (CoC) Return: This is arguably the most important metric for investors. It measures the annual return on the actual cash you invested (down payment + closing costs). For example, if you invest $50,000 and receive $5,000 in annual cash flow, your CoC return is 10%.
- Cap Rate (Capitalization Rate): This measures the rate of return on a real estate investment property based on the income that the property is expected to generate. It is calculated by dividing the NOI by the property's current market value. It helps compare properties quickly without factoring in specific loan terms.
How to Use This Calculator
To get the most accurate results, input realistic numbers for all fields. Don't overlook "hidden" costs like vacancy rates (typically 5-8% depending on the market) and maintenance (usually 5-10% of rent for repairs and CapEx reserves). By factoring in property management fees, even if you plan to self-manage, you ensure the deal still works if you decide to hire help later.
Why Cash Flow Matters for Long-Term Wealth
While appreciation (the increase in property value over time) is a great bonus, cash flow is what keeps your business running. Properties with strong positive cash flow provide a buffer against market downturns, allowing you to hold the asset indefinitely while your tenants pay down your mortgage.