Rental property cash flow is the net amount of money remaining after all operating expenses and mortgage payments have been deducted from the rental income. Positive cash flow indicates a profitable investment where income exceeds expenses, while negative cash flow means the property costs more to operate than it generates.
Why Cash-on-Cash ROI Matters
While standard ROI looks at total return, Cash-on-Cash ROI specifically measures the annual return on the actual cash you invested (your down payment and closing costs), rather than the total purchase price of the property. This is the gold standard metric for real estate investors using leverage (mortgages).
How This Calculator Works
This calculator determines the profitability of a potential real estate investment using the following logic:
Principal & Interest (P&I): Calculates your monthly loan payment based on the loan amount (Price – Down Payment), interest rate, and term.
Operating Expenses: Aggregates annual taxes, insurance, and monthly maintenance costs into a total monthly deduction.
Net Cash Flow: Subtracts total expenses and mortgage payments from your monthly rental income.
ROI Formula:(Annual Net Cash Flow / Total Cash Invested) * 100
Interpreting Your Results
8-12% ROI: Generally considered a solid return for rental properties in stable markets. Above 15% ROI: Excellent performance, often found in high-yield cash flow markets or through value-add strategies. Negative ROI: The property is losing money monthly. This might be acceptable if banking on significant appreciation, but it presents a higher risk to your immediate liquidity.
function calculateRentalROI() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var annualTaxes = parseFloat(document.getElementById("annualTaxes").value);
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value);
var monthlyMaintenance = parseFloat(document.getElementById("monthlyMaintenance").value);
// 2. Validation
var errorDisplay = document.getElementById("errorDisplay");
if (isNaN(purchasePrice) || isNaN(downPayment) || isNaN(interestRate) ||
isNaN(loanTerm) || isNaN(monthlyRent) || isNaN(annualTaxes) ||
isNaN(annualInsurance) || isNaN(monthlyMaintenance)) {
errorDisplay.style.display = "block";
document.getElementById("resultsArea").style.display = "none";
return;
} else {
errorDisplay.style.display = "none";
}
// 3. Calculation Logic
// Loan Calculation
var loanAmount = purchasePrice – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Mortgage P&I Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyMortgage = 0;
if (loanAmount > 0) {
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
}
// Expense Calculation
var monthlyTax = annualTaxes / 12;
var monthlyIns = annualInsurance / 12;
var totalMonthlyExpenses = monthlyMortgage + monthlyTax + monthlyIns + monthlyMaintenance;
// Cash Flow Calculation
var netMonthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = netMonthlyCashFlow * 12;
// ROI Calculation (Cash on Cash)
// Note: Simplification assumes Total Investment = Down Payment.
// In real life, closing costs would be added, but prompt requests valid logic based on inputs.
var totalInvestment = downPayment;
var cashOnCashROI = 0;
if (totalInvestment > 0) {
cashOnCashROI = (annualCashFlow / totalInvestment) * 100;
}
// 4. Update UI
// Format Currency Function
function formatMoney(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
document.getElementById("resMortgage").innerText = formatMoney(monthlyMortgage);
document.getElementById("resExpenses").innerText = formatMoney(totalMonthlyExpenses);
var cashFlowEl = document.getElementById("resCashFlow");
cashFlowEl.innerText = formatMoney(netMonthlyCashFlow);
if(netMonthlyCashFlow >= 0) {
cashFlowEl.className = "roi-result-value roi-highlight";
} else {
cashFlowEl.className = "roi-result-value roi-negative";
}
var annualFlowEl = document.getElementById("resAnnualFlow");
annualFlowEl.innerText = formatMoney(annualCashFlow);
if(annualCashFlow >= 0) {
annualFlowEl.className = "roi-result-value roi-highlight";
} else {
annualFlowEl.className = "roi-result-value roi-negative";
}
var roiEl = document.getElementById("resROI");
roiEl.innerText = cashOnCashROI.toFixed(2) + "%";
if(cashOnCashROI >= 0) {
roiEl.className = "roi-result-value roi-highlight";
} else {
roiEl.className = "roi-result-value roi-negative";
}
// Show Results
document.getElementById("resultsArea").style.display = "block";
}