Rental Property Cash Flow Calculator
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Rental Property Cash Flow Calculator
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must accurately calculate Cash Flow. This calculator helps you determine if a potential rental property will generate positive income after all expenses are paid.
Key Metrics Explained
1. Net Operating Income (NOI)
Net Operating Income is the foundation of real estate valuation. It is calculated by subtracting all operating expenses (taxes, insurance, maintenance, HOA, vacancy) from the effective rental income. Importantly, NOI does not include mortgage payments. It represents the profitability of the property itself, independent of financing.
2. Cash Flow
Cash Flow is the net amount of cash moving in or out of the investment each month. It is calculated as NOI minus Debt Service (Mortgage Payment).
- Positive Cash Flow: You are making money every month. Ideally, you want enough cushion to cover unexpected repairs.
- Negative Cash Flow: The property costs you money to hold. This is generally risky unless you are banking on significant appreciation.
3. Cash on Cash Return (CoC)
This metric measures the annual return on the actual cash you invested (down payment + closing costs). It is calculated as: (Annual Cash Flow / Total Cash Invested) × 100. A CoC return of 8-12% is often considered a solid benchmark for rental properties, though this varies by market.
4. Cap Rate (Capitalization Rate)
Cap Rate measures the rate of return on the property assuming it was bought entirely with cash. Formula: (Annual NOI / Purchase Price) × 100. It allows you to compare the profitability of different properties regardless of how they are financed.
Example Scenario
Consider a property listed for $200,000. You put 20% down ($40,000).
If the property rents for $2,000/month and your total operating expenses (taxes, insurance, vacancy, repairs) are $800/month, your NOI is $1,200.
If your mortgage payment is roughly $1,000/month, your monthly Cash Flow is $200 ($1,200 – $1,000). Your Cash on Cash return would be roughly 6% ($2,400 annual cash flow / $40,000 investment).
Use the calculator above to tweak the numbers and find the "sweet spot" for your next 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 vacancyRate = parseFloat(document.getElementById('vacancyRate').value);
var annualTaxes = parseFloat(document.getElementById('annualTaxes').value);
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value);
var monthlyRepairs = parseFloat(document.getElementById('monthlyRepairs').value);
var monthlyHOA = parseFloat(document.getElementById('monthlyHOA').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(interestRate) || isNaN(termYears) || isNaN(rent)) {
alert("Please enter valid numbers for all fields.");
return;
}
// Calculations
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
// Mortgage Payment (PI)
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
var mortgagePayment = 0;
if (interestRate > 0) {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
mortgagePayment = loanAmount / numberOfPayments;
}
// Income Calculations
var vacancyLoss = rent * (vacancyRate / 100);
var effectiveGrossIncome = rent – vacancyLoss;
// Expense Calculations
var monthlyTaxes = annualTaxes / 12;
var monthlyInsurance = annualInsurance / 12;
var totalOperatingExpenses = monthlyTaxes + monthlyInsurance + monthlyRepairs + monthlyHOA;
// NOI
var monthlyNOI = effectiveGrossIncome – totalOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// Cash Flow
var monthlyCashFlow = monthlyNOI – mortgagePayment;
var annualCashFlow = monthlyCashFlow * 12;
// Returns
var capRate = (annualNOI / price) * 100;
var cocReturn = (annualCashFlow / downPayment) * 100;
// Total Expenses for display (Operating + Mortgage)
var totalMonthlyOutflow = totalOperatingExpenses + mortgagePayment;
// Display Results
var cashFlowEl = document.getElementById('monthlyCashFlow');
cashFlowEl.innerText = "$" + monthlyCashFlow.toFixed(2);
if (monthlyCashFlow >= 0) {
cashFlowEl.className = "result-value positive";
} else {
cashFlowEl.className = "result-value negative";
}
document.getElementById('cocReturn').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('capRate').innerText = capRate.toFixed(2) + "%";
document.getElementById('monthlyNOI').innerText = "$" + monthlyNOI.toFixed(2);
document.getElementById('totalExpenses').innerText = "$" + totalMonthlyOutflow.toFixed(2);
// Show results container
document.getElementById('results').style.display = 'block';
}