Rental Property Cash Flow Calculator
Analyze your real estate investment deals by calculating monthly cash flow, ROI, and capitalization rates.
Analysis Results
Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any rental property investment. It represents the net amount of money left in your pocket after all expenses are paid. A positive cash flow indicates that the property is generating income, while a negative cash flow means the property is costing you money every month. Using a Rental Property Cash Flow Calculator helps investors objectively evaluate a deal before signing the contract.
How to Calculate Cash on Cash Return
Cash on Cash Return (CoC) is a critical metric that measures the annual return on the actual cash you invested, rather than the total loan amount. It is calculated using the following formula:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
Your "Total Cash Invested" includes your down payment, closing costs, and any immediate renovation costs. A good CoC return varies by market, but many investors aim for 8-12% or higher.
What is Cap Rate?
The Capitalization Rate (Cap Rate) measures the property's natural rate of return assuming it was bought with cash (no loan). It allows you to compare properties regardless of financing.
- Formula: Cap Rate = Net Operating Income (NOI) / Purchase Price
- NOI: Annual Rental Income minus Operating Expenses (excluding mortgage payments).
Common Rental Expenses to Consider
When estimating cash flow, beginners often overlook certain expenses. Ensure you account for:
- Vacancy: Properties won't be rented 365 days a year. Budget 5-10% of rent.
- Maintenance & CapEx: Roofs, HVAC, and painting cost money. Budget 5-15%.
- Property Management: Even if you self-manage, account for your time (usually 8-10% of rent).