Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good deal. The key to successful real estate investing is understanding the numbers. This Rental Property Cash Flow Calculator is designed to help investors quickly analyze the profitability of a potential rental property.
How to Calculate Rental Property Cash Flow
Cash flow is the net amount of cash moving into or out of a business or investment. In real estate, it represents the money remaining after all expenses are paid. Positive cash flow means you are making a profit every month, while negative cash flow implies a loss.
The Basic Formula
The calculation is straightforward in theory but requires accuracy in detail:
Cash Flow = Total Monthly Rental Income – Total Monthly Expenses
Total Monthly Expenses generally include:
Mortgage Principal & Interest payments
Property Taxes
Landlord Insurance
HOA Fees (if applicable)
Property Management Fees
Maintenance and Capital Expenditures (CapEx) reserves
Vacancy reserves
Key Metrics Explained
1. Monthly Cash Flow
This is your "take-home" pay from the property before income taxes. Investors typically aim for at least $100-$300 per door per month, though this varies by market and strategy.
2. Cash on Cash Return (CoC)
This metric measures the annual return on the actual cash you invested (down payment + closing costs + rehab costs). It is crucial for comparing real estate returns against other investment vehicles like stocks.
Formula: (Annual Cash Flow / Total Cash Invested) × 100
3. Cap Rate (Capitalization Rate)
The Cap Rate measures a property's natural rate of return assuming it was bought with cash (no loan). It helps compare the profitability of properties regardless of how they are financed.
Formula: (Net Operating Income / Purchase Price) × 100
Why Use a Cash Flow Calculator?
Using a manual spreadsheet leaves room for error. A dedicated calculator ensures:
Benefit
Description
Speed
Analyze multiple deals in minutes rather than hours.
Accuracy
Automated amortization formulas prevent math errors on mortgage payments.
Objectivity
Removes emotion from the decision-making process by focusing strictly on the data.
Tips for Maximizing Cash Flow
Increase Rent: Keeping up with market rates is the fastest way to boost NOI.
Decrease Vacancy: Long-term tenants reduce turnover costs and vacancy loss.
Preventative Maintenance: Fixing small leaks now prevents expensive water damage later.
Refinance: If interest rates drop, refinancing can significantly lower your monthly mortgage obligation.
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"mainEntity": [{
"@type": "Question",
"name": "What is a good cash on cash return for rental property?",
"acceptedAnswer": {
"@type": "Answer",
"text": "While 'good' is subjective, many investors aim for a Cash on Cash return of 8-12%. However, in high-appreciation markets, investors might accept lower cash flow (4-6%) in exchange for long-term equity growth."
}
}, {
"@type": "Question",
"name": "How is Cap Rate different from Cash on Cash return?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Cap Rate evaluates the profitability of the property itself, ignoring financing (mortgage). Cash on Cash return evaluates the profitability of your specific investment based on how much money you put down."
}
}, {
"@type": "Question",
"name": "Should I include vacancy in my expense calculation?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Yes. Even if a property is currently occupied, you should budget 5-8% of the monthly rent for future vacancies to ensure your cash flow analysis is realistic over the long term."
}
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}
function calculateRentalCashFlow() {
// 1. Get input values
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var income = parseFloat(document.getElementById('rentalIncome').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
// 2. Validate inputs
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(term) || isNaN(income) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 3. Calculate Loan Details
var loanAmount = price – down;
var monthlyRate = (rate / 100) / 12;
var numberOfPayments = term * 12;
// Mortgage Calculation Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mortgagePayment = 0;
if (rate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
} else {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 4. Calculate Cash Flow Metrics
var totalMonthlyCost = mortgagePayment + expenses;
var monthlyCashFlow = income – totalMonthlyCost;
var annualCashFlow = monthlyCashFlow * 12;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested (assuming Down Payment is total invested for simplicity here)
var cashOnCash = 0;
if (down > 0) {
cashOnCash = (annualCashFlow / down) * 100;
}
// Cap Rate = NOI / Price
// Net Operating Income (NOI) = (Income – Operating Expenses) * 12. Note: NOI excludes mortgage.
var annualNOI = (income – expenses) * 12;
var capRate = (annualNOI / price) * 100;
// 5. Update UI
var resultsArea = document.getElementById('resultsArea');
resultsArea.style.display = 'block';
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('displayCashFlow').innerText = formatter.format(monthlyCashFlow);
document.getElementById('displayMortgage').innerText = formatter.format(mortgagePayment);
// Format Percentages
document.getElementById('displayCoC').innerText = cashOnCash.toFixed(2) + "%";
document.getElementById('displayCapRate').innerText = capRate.toFixed(2) + "%";
// Color Coding
var cfElement = document.getElementById('displayCashFlow');
if (monthlyCashFlow >= 0) {
cfElement.classList.remove('negative');
cfElement.classList.add('positive');
} else {
cfElement.classList.remove('positive');
cfElement.classList.add('negative');
}
}