Rental Property Cash Flow Calculator
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Rental Property Cash Flow Calculator
Understanding Rental Property Cash Flow
Investing in real estate is a powerful way to build wealth, but the numbers must make sense. The Rental Property Cash Flow Calculator helps investors determine if a potential property will generate a monthly profit or cost money to hold.
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of an investment property. Positive cash flow occurs when your property's rental income exceeds all expenses, including the mortgage, taxes, insurance, and maintenance costs. Negative cash flow means the property costs more to operate than it brings in rent.
Formula: Cash Flow = Total Rental Income – Total Expenses
Key Metrics in This Calculator
- NOI (Net Operating Income): The annual income generated by a revenue-generating property, deducting all expenses that are incurred from operations (excluding mortgage/interest).
- Cap Rate (Capitalization Rate): Used to estimate the investor's potential return on their investment. Calculated as NOI / Purchase Price. It helps compare properties regardless of financing.
- Cash on Cash Return: A rate of return ratio that calculates the total cash earned on the total cash invested. Calculated as Annual Pre-Tax Cash Flow / Total Cash Invested.
Estimating Expenses
Many new investors underestimate expenses. To get an accurate calculation, ensure you account for:
- Vacancy: Properties are rarely occupied 100% of the time. A 5-8% vacancy allowance is standard.
- Maintenance: Setting aside 5-10% of the rent for future repairs (roof, HVAC, plumbing) prevents shock expenses.
- Management Fees: If you hire a property manager, they typically charge 8-12% of the monthly rent.
Example Calculation
Imagine purchasing a property for $200,000 with $40,000 down. The rent is $1,800/month.
- Mortgage (P&I): ~$1,011 (at 6.5% interest)
- Taxes & Insurance: ~$350/month
- Vacancy/Maintenance (10%): $180/month
- Total Expenses: $1,541
- Cash Flow: $1,800 – $1,541 = $259/month
This positive cash flow indicates a potentially healthy investment, subject to further due diligence.
function calculateCashFlow() {
// 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 yearlyTax = parseFloat(document.getElementById('yearlyPropertyTax').value);
var yearlyIns = parseFloat(document.getElementById('yearlyInsurance').value);
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value);
var managementFee = parseFloat(document.getElementById('managementFee').value);
// Validation to prevent NaN errors
if (isNaN(purchasePrice)) purchasePrice = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(interestRate)) interestRate = 0;
if (isNaN(loanTerm)) loanTerm = 30;
if (isNaN(monthlyRent)) monthlyRent = 0;
if (isNaN(yearlyTax)) yearlyTax = 0;
if (isNaN(yearlyIns)) yearlyIns = 0;
if (isNaN(vacancyRate)) vacancyRate = 0;
if (isNaN(maintenanceRate)) maintenanceRate = 0;
if (isNaN(managementFee)) managementFee = 0;
// 2. Calculate Mortgage Payment (Principal + Interest)
var principal = purchasePrice – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (principal > 0 && interestRate > 0) {
monthlyMortgage = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (principal > 0 && interestRate === 0) {
monthlyMortgage = principal / numberOfPayments;
}
// 3. Calculate Monthly Operating Expenses
var monthlyTax = yearlyTax / 12;
var monthlyIns = yearlyIns / 12;
var monthlyVacancy = monthlyRent * (vacancyRate / 100);
var monthlyMaintenance = monthlyRent * (maintenanceRate / 100);
var monthlyManagement = monthlyRent * (managementFee / 100);
var totalOperatingExpenses = monthlyTax + monthlyIns + monthlyVacancy + monthlyMaintenance + monthlyManagement;
var totalExpenses = totalOperatingExpenses + monthlyMortgage;
// 4. Calculate Key Metrics
var monthlyCashFlow = monthlyRent – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI) = Income – Operating Expenses (Excludes Debt Service)
var monthlyNOI = monthlyRent – totalOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// Cap Rate = Annual NOI / Purchase Price
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested (Assuming Downpayment is total cash invested for simplicity)
var cashOnCash = 0;
if (downPayment > 0) {
cashOnCash = (annualCashFlow / downPayment) * 100;
}
// 5. Display Results
document.getElementById('resultMortgage').innerText = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultExpenses').innerText = "$" + totalExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultNOI').innerText = "$" + monthlyNOI.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('resultCashFlow');
cfElement.innerText = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Style cash flow color
if (monthlyCashFlow >= 0) {
cfElement.className = "result-value positive-cf";
} else {
cfElement.className = "result-value negative-cf";
}
document.getElementById('resultCoC').innerText = cashOnCash.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "%";
document.getElementById('resultCapRate').innerText = capRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "%";
// Show results area
document.getElementById('results-area').style.display = 'block';
}