Rental Property Calculator
Includes taxes, insurance, HOA, maintenance
Please enter valid positive numbers in all fields.
Monthly Mortgage Payment (P&I):
$0.00
Total Monthly Expenses:
$0.00
Net Monthly Cash Flow:
$0.00
Cash on Cash Return (Annual):
0.00%
Cap Rate:
0.00%
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but the success of an investment property hinges on one critical metric: Cash Flow. This calculator helps investors analyze potential deals by breaking down income, expenses, and debt service to reveal the true profitability of a rental asset.
How to Calculate Cash Flow
Cash flow is the net amount of money moving into or out of your business after all expenses are paid. For a rental property, the formula is simple conceptually but requires accuracy in detail:
- Gross Income: The total rent collected plus any other income (parking fees, laundry, etc.).
- Operating Expenses: Costs required to run the property, including property taxes, landlord insurance, HOA fees, maintenance, vacancy reserves, and property management.
- Net Operating Income (NOI): Gross Income minus Operating Expenses.
- Debt Service: Your monthly mortgage payment (Principal and Interest).
- Cash Flow: NOI minus Debt Service.
Key Metrics Explained
Beyond simple cash flow, professional investors look at two other percentages to evaluate a deal's efficiency:
1. Cash on Cash Return (CoC)
This measures the return on the actual cash you invested (down payment + closing costs + rehab costs). It is calculated as:
(Annual Cash Flow / Total Cash Invested) × 100
A good CoC return depends on the market, but many investors target 8-12%.
2. Cap Rate (Capitalization Rate)
The Cap Rate indicates the potential return on investment assuming you bought the property with all cash. It helps compare properties regardless of financing.
(Net Operating Income / Current Market Value) × 100
Example Calculation
Imagine you purchase a property for $200,000 with $40,000 down. You rent it for $2,000/month.
- Mortgage: ~$1,000/month (depending on rates).
- Expenses: ~$600/month (Taxes, Insurance, Repairs).
- Total Outflow: $1,600/month.
- Cash Flow: $2,000 – $1,600 = $400/month ($4,800/year).
- CoC Return: $4,800 / $40,000 = 12%.
Use the calculator above to run your own scenarios and ensure your next investment yields positive cash flow.