Understanding the financial performance of a potential real estate investment is crucial for long-term success. This Rental Property Cash Flow Calculator helps investors analyze deals by breaking down income, operating expenses, and financing costs to determine the true profitability of a rental unit.
How to Calculate Rental Cash Flow
Cash flow is the net amount of cash moving into and out of a business. In real estate, it is calculated as:
Cash Flow = Gross Rental Income – Total Expenses
Where "Total Expenses" includes your mortgage payment (Principal & Interest) and operating expenses like taxes, insurance, homeowner association (HOA) fees, maintenance reserves, and vacancy allowances.
Key Investment Metrics Explained
1. Net Operating Income (NOI)
NOI is a calculation used to analyze the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses. critically, NOI excludes the mortgage payment. It represents the income the property produces regardless of how it is financed.
2. Cash on Cash Return (CoC)
This is arguably the most important metric for investors. It measures the annual return on the actual cash invested (your down payment and closing costs). A Cash on Cash return of 8-12% is generally considered a solid benchmark for residential rentals.
3. Cap Rate (Capitalization Rate)
The Cap Rate indicates the rate of return that is expected to be generated on a real estate investment property. It is calculated by dividing the Net Operating Income by the property asset value. It helps compare properties regardless of financing.
Why Include Vacancy and Maintenance?
Novice investors often make the mistake of calculating cash flow based solely on Rent minus Mortgage. This is dangerous. Realistically, tenants will move out (Vacancy), and toilets will break (Maintenance). Our calculator allows you to input a percentage for vacancy (typically 5-8%) and a monthly dollar amount for maintenance to give you a realistic "conservative" view of your investment.
function calculateCashFlow() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var termYears = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var annualTax = parseFloat(document.getElementById('propertyTax').value);
var annualInsurance = parseFloat(document.getElementById('insurance').value);
var monthlyHoa = parseFloat(document.getElementById('hoa').value);
var monthlyMaintenance = parseFloat(document.getElementById('maintenance').value);
var vacancyPercent = parseFloat(document.getElementById('vacancy').value);
// Validation
if (isNaN(price) || isNaN(rent) || isNaN(interestRate) || isNaN(termYears)) {
alert("Please enter valid numbers for Price, Rent, Interest Rate, and Loan Term.");
return;
}
// 1. Calculate Mortgage (P&I)
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
var monthlyMortgage = 0;
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * monthlyRate * (Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 2. Calculate Operating Expenses
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var vacancyCost = rent * (vacancyPercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyHoa + monthlyMaintenance + vacancyCost;
var totalMonthlyExpenses = totalOperatingExpenses + monthlyMortgage;
// 3. Calculate Metrics
var noiMonthly = rent – totalOperatingExpenses;
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = noiMonthly * 12;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested (Assuming Down Payment is total invested for simplicity)
var cocReturn = 0;
if (downPayment > 0) {
cocReturn = (annualCashFlow / downPayment) * 100;
}
// Cap Rate = Annual NOI / Purchase Price
var capRate = (annualNOI / price) * 100;
// Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('res-mortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('res-expenses').innerText = formatter.format(totalOperatingExpenses + monthlyMortgage); // Operating + Mortgage
document.getElementById('res-noi').innerText = formatter.format(noiMonthly);
document.getElementById('res-cashflow').innerText = formatter.format(monthlyCashFlow);
document.getElementById('res-annual-cashflow').innerText = formatter.format(annualCashFlow);
document.getElementById('res-coc').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('res-cap').innerText = capRate.toFixed(2) + "%";
// Styling updates for positive/negative cashflow
var cfElement = document.getElementById('res-cashflow');
if (monthlyCashFlow >= 0) {
cfElement.style.color = "#27ae60";
} else {
cfElement.style.color = "#c0392b";
}
document.getElementById('results-area').style.display = "block";
}