function calculateRentalReturns() {
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPaymentPercent = 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 monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
// Basic Validation
if (isNaN(purchasePrice) || isNaN(downPaymentPercent) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(monthlyRent) || isNaN(monthlyExpenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Calculations
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
// Mortgage Calculation
var monthlyMortgage = 0;
if (loanAmount > 0) {
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = loanTerm * 12;
if (monthlyRate === 0) {
monthlyMortgage = loanAmount / totalPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
}
}
var totalMonthlyCosts = monthlyMortgage + monthlyExpenses;
var monthlyCashFlow = monthlyRent – totalMonthlyCosts;
var annualCashFlow = monthlyCashFlow * 12;
// NOI (Net Operating Income) does NOT include mortgage principal/interest
var annualNOI = (monthlyRent – monthlyExpenses) * 12;
// Cash on Cash ROI
var cashOnCash = 0;
if (downPaymentAmount > 0) {
// Assuming closing costs are roughly 2% of purchase price for a more realistic ROI estimate,
// but keeping it simple based on user input fields usually means just downpayment or explicit field.
// We will stick to Down Payment as the 'Cash Invested' for this specific prompt scope.
cashOnCash = (annualCashFlow / downPaymentAmount) * 100;
}
// Cap Rate
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// Formatting Output
var fmtCurrency = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('resMortgage').innerText = fmtCurrency.format(monthlyMortgage);
document.getElementById('resTotalExpenses').innerText = fmtCurrency.format(totalMonthlyCosts);
document.getElementById('resNOI').innerText = fmtCurrency.format(annualNOI);
var cashFlowEl = document.getElementById('resMonthlyCashFlow');
cashFlowEl.innerText = fmtCurrency.format(monthlyCashFlow);
if(monthlyCashFlow >= 0) {
cashFlowEl.className = "rp-result-value rp-highlight";
} else {
cashFlowEl.className = "rp-result-value rp-highlight-neg";
}
var cocEl = document.getElementById('resCoC');
cocEl.innerText = cashOnCash.toFixed(2) + "%";
if(cashOnCash >= 0) {
cocEl.className = "rp-result-value rp-highlight";
} else {
cocEl.className = "rp-result-value rp-highlight-neg";
}
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
// Show Results
document.getElementById('resultsArea').style.display = 'block';
}
Understanding Rental Property Cash Flow & ROI
Investing in real estate is one of the most reliable ways to build wealth, but analyzing a deal correctly is crucial to success. Our Rental Property Cash Flow Calculator helps investors determine the profitability of a potential purchase by analyzing key metrics like Cash Flow, Cash on Cash Return, and Cap Rate.
What is Rental Cash Flow?
Cash flow is the net amount of money moving in or out of a rental property business after all expenses have been paid. It is calculated by subtracting your total monthly expenses (mortgage, taxes, insurance, repairs, HOA) from your total monthly rental income.
Positive Cash Flow: The property generates more income than it costs to own. This is the goal for most buy-and-hold investors.
Negative Cash Flow: The property costs more to maintain than it brings in. This is often sustainable only if the property is appreciating rapidly in value.
Cash on Cash Return (CoC ROI)
While cash flow tells you how much money you make monthly, the Cash on Cash Return tells you how hard your money is working. It measures the annual pre-tax cash flow against the total cash invested (down payment).
Formula: (Annual Cash Flow / Total Cash Invested) x 100
A "good" CoC return varies by market, but many investors aim for 8-12% or higher. This metric allows you to compare real estate investments against other vehicles like stocks or bonds.
Capitalization Rate (Cap Rate)
The Cap Rate measures the property's natural rate of return assuming it was bought with all cash (no loan). It helps compare the profitability of properties regardless of financing.
Formula: (Net Operating Income / Purchase Price) x 100
Net Operating Income (NOI) is the revenue left after operating expenses but before mortgage payments. A higher Cap Rate generally indicates a better return, though often accompanied by higher risk (e.g., lower-income neighborhoods).
Why Use This Calculator?
Before making an offer on a property, use this tool to stress-test your numbers. Adjust the monthly rent to see how vacancies might affect your bottom line, or increase the interest rate to see if the deal still makes sense in a rising rate environment. Successful investors never buy on emotion; they buy based on the numbers.