function calculateRentalROI() {
// 1. Get input values
var propValue = parseFloat(document.getElementById('propValue').value);
var downPaymentPct = parseFloat(document.getElementById('downPayment').value);
var intRate = parseFloat(document.getElementById('intRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var monthlyExp = parseFloat(document.getElementById('monthlyExp').value);
// Validation
if (isNaN(propValue) || isNaN(downPaymentPct) || isNaN(intRate) || isNaN(loanTerm) || isNaN(monthlyRent) || isNaN(monthlyExp)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 2. Calculate Loan Details
var downPaymentAmt = propValue * (downPaymentPct / 100);
var loanAmount = propValue – downPaymentAmt;
var monthlyRate = (intRate / 100) / 12;
var numPayments = loanTerm * 12;
// Mortgage Calculation (M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1])
var mortgagePayment = 0;
if (intRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
mortgagePayment = loanAmount / numPayments;
}
// 3. Calculate Expenses and Cash Flow
var totalMonthlyExpenses = mortgagePayment + monthlyExp;
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 4. Calculate Cash on Cash Return
// Investment = Down Payment (simplified, ignoring closing costs for this basic calc)
var totalInvestment = downPaymentAmt;
var cocReturn = 0;
if (totalInvestment > 0) {
cocReturn = (annualCashFlow / totalInvestment) * 100;
}
// 5. Update HTML
document.getElementById('resLoanAmount').innerText = "$" + loanAmount.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resMortgage').innerText = "$" + mortgagePayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalExpenses').innerText = "$" + totalMonthlyExpenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlyCashFlow >= 0) {
cfElement.className = "result-value positive";
} else {
cfElement.className = "result-value negative";
}
var cocElement = document.getElementById('resCOC');
cocElement.innerText = cocReturn.toFixed(2) + "%";
if (cocReturn >= 0) {
cocElement.className = "result-value positive";
} else {
cocElement.className = "result-value negative";
}
document.getElementById('resultsArea').style.display = "block";
}
Understanding Rental Property Cash Flow
Investing in real estate is a powerful vehicle for wealth generation, but success hinges on the numbers. The Rental Property Cash Flow Calculator helps investors determine the viability of a potential investment by analyzing income versus expenses.
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of a business. In real estate terms, it is the money left over from your rental income after all operating expenses and debt service (mortgage payments) have been paid. Positive cash flow means the property generates income for you every month, while negative cash flow implies the property costs you money to hold.
Key Metrics Explained
Purchase Price: The total cost to buy the property.
Down Payment: The cash you invest upfront. A typical investment property loan requires 20-25% down.
Operating Expenses: These are the recurring costs of owning the property, excluding the mortgage. They include property taxes, homeowner's insurance, HOA fees, property management fees, and a budget for repairs and vacancy.
Cash on Cash Return (CoC): This is arguably the most important metric for rental investors. It measures the annual return on the actual cash invested, rather than the total loan amount. It is calculated as (Annual Cash Flow / Total Cash Invested) * 100.
How to Interpret Your Results
Using this calculator, you can instantly see if a deal makes financial sense.
Scenario A: High Cash Flow. If your Monthly Cash Flow is positive (green), the tenant is essentially paying off your mortgage while putting extra money in your pocket. This is the goal of "buy and hold" investors.
Scenario B: Negative Cash Flow. If the result is negative (red), the rent does not cover the expenses. You might still consider the property if you are banking on significant appreciation (increase in property value over time), but this is a riskier strategy often called "speculating" rather than "investing."
Improving Your ROI
If the calculator shows a low or negative return, consider these adjustments:
Negotiate a lower purchase price.
Shop for a lower interest rate or different loan terms.
Look for ways to increase the rental income (e.g., renovations).
Reduce operating expenses (e.g., self-managing instead of hiring a manager).
Real estate investment requires diligence. Always verify your estimates for taxes, insurance, and maintenance before signing a contract. Use this tool as a preliminary filter to quickly discard bad deals and focus on the profitable ones.