function calculateRentalCashFlow() {
// Get Inputs
var rent = parseFloat(document.getElementById('monthlyRent').value);
var other = parseFloat(document.getElementById('otherIncome').value);
var mortgage = parseFloat(document.getElementById('mortgagePayment').value);
var tax = parseFloat(document.getElementById('propertyTax').value);
var insurance = parseFloat(document.getElementById('insurance').value);
var hoa = parseFloat(document.getElementById('hoaFees').value);
var vacancyPct = parseFloat(document.getElementById('vacancyRate').value);
var repairPct = parseFloat(document.getElementById('repairRate').value);
var capexPct = parseFloat(document.getElementById('capexRate').value);
var mgmtPct = parseFloat(document.getElementById('managementFee').value);
// Validation
if (isNaN(rent) || isNaN(mortgage) || isNaN(tax) || isNaN(insurance)) {
alert("Please fill in all required fields (Rent, Mortgage, Tax, Insurance) with valid numbers.");
return;
}
// Handle optional empty fields as 0
if (isNaN(other)) other = 0;
if (isNaN(hoa)) hoa = 0;
if (isNaN(vacancyPct)) vacancyPct = 0;
if (isNaN(repairPct)) repairPct = 0;
if (isNaN(capexPct)) capexPct = 0;
if (isNaN(mgmtPct)) mgmtPct = 0;
// Calculations
var grossIncome = rent + other;
var vacancyCost = grossIncome * (vacancyPct / 100);
var effectiveIncome = grossIncome – vacancyCost;
var repairCost = grossIncome * (repairPct / 100);
var capexCost = grossIncome * (capexPct / 100);
var mgmtCost = grossIncome * (mgmtPct / 100);
var totalVariableExpenses = repairCost + capexCost + mgmtCost;
var totalFixedExpenses = tax + insurance + hoa;
var totalExpensesWithoutMortgage = totalFixedExpenses + totalVariableExpenses;
var netOperatingIncome = effectiveIncome – totalExpensesWithoutMortgage;
var monthlyCashFlow = netOperatingIncome – mortgage;
var annualCashFlow = monthlyCashFlow * 12;
// Display Results
document.getElementById('displayGrossIncome').innerText = '$' + grossIncome.toFixed(2);
document.getElementById('displayVacancy').innerText = '-$' + vacancyCost.toFixed(2);
document.getElementById('displayOpExpenses').innerText = '-$' + totalVariableExpenses.toFixed(2);
document.getElementById('displayFixedExpenses').innerText = '-$' + totalFixedExpenses.toFixed(2);
document.getElementById('displayMortgage').innerText = '-$' + mortgage.toFixed(2);
var cashFlowEl = document.getElementById('displayCashFlow');
var annualFlowEl = document.getElementById('displayAnnualCashFlow');
cashFlowEl.innerText = '$' + monthlyCashFlow.toFixed(2);
annualFlowEl.innerText = '$' + annualCashFlow.toFixed(2);
// Styling positive vs negative
if (monthlyCashFlow >= 0) {
cashFlowEl.className = "rpc-positive";
annualFlowEl.className = "rpc-positive";
} else {
cashFlowEl.className = "rpc-negative";
annualFlowEl.className = "rpc-negative";
}
document.getElementById('rpcResults').style.display = 'block';
}
Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any real estate investment. It represents the net amount of money that moves in and out of your rental business each month. Positive cash flow means your property is generating profit after all expenses are paid, while negative cash flow means you are losing money every month to hold the asset.
How to Calculate Cash Flow Accurately
Many new investors make the mistake of simply subtracting the mortgage payment from the rental income to determine their profit. However, a true cash flow analysis requires a more granular look at both fixed and variable expenses:
Gross Income: The total rent collected plus any additional income sources like parking fees, laundry machines, or pet rent.
Vacancy Loss: Properties are rarely occupied 100% of the time. Factoring in a vacancy rate (typically 5-8%) ensures you have a buffer for turnover periods.
Operating Expenses: These are the costs to keep the property running, including property taxes, insurance, HOA fees, and utilities.
Reserves (CapEx & Repairs): Smart investors set aside a percentage of rent (often 5-10%) for routine maintenance (leaky faucets) and Capital Expenditures (replacing a roof or HVAC system).
What is the "50% Rule" in Real Estate?
The 50% rule is a quick heuristic used by investors to screen properties. It states that, on average, a rental property's operating expenses (excluding the mortgage payment) will equal roughly 50% of the gross rental income. While this calculator provides a precise breakdown based on your specific inputs, the 50% rule is a helpful sanity check. If your calculated expenses are significantly lower than 50%, double-check that you aren't underestimating maintenance or vacancy costs.
Why Positive Cash Flow Matters
Investing for cash flow provides a safety net. If market values dip, a cash-flowing property allows you to hold the asset without financial stress. It effectively pays you to wait for the market to recover. Conversely, relying solely on appreciation (betting the home value will go up) is speculative and risky if the property drains your bank account every month.
Interpreting Your Results
$100 – $200 / door: This is generally considered acceptable cash flow for a single-family home in a stable market.
$300+ / door: This is considered excellent cash flow and typically indicates a strong investment, though it may be harder to find in high-cost coastal markets.
Negative Cash Flow: Unless you are in a rapidly appreciating market and have significant capital reserves, negative cash flow is a warning sign. Review your mortgage terms or rental pricing to see if the deal can be structured differently.