Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property doesn't guarantee profit. The most critical metric for any buy-and-hold investor is Cash Flow. This Rental Property Cash Flow Calculator is designed to help you analyze potential deals by accounting for mortgage payments, operating expenses, and vacancy rates.
What is Positive Cash Flow?
Positive cash flow occurs when a property's gross rental income exceeds all of its expenses, including the mortgage, taxes, insurance, and maintenance. This is the "profit" you take home every month. Conversely, negative cash flow means you are losing money on the property every month, which is a risky position for most investors.
Key Metrics Explained
NOI (Net Operating Income): This is your total income minus operating expenses (excluding the mortgage). It represents the profitability of the property itself, regardless of financing.
Cash on Cash Return: This percentage measures the return on the actual cash you invested (down payment + closing costs). It is calculated as: (Annual Cash Flow / Total Cash Invested) × 100. A good CoC return is typically considered to be above 8-12%, depending on the market.
Cap Rate (Capitalization Rate): This metric helps compare different properties by calculating the rate of return on the property if it were bought with all cash. It is calculated as: (Annual NOI / Purchase Price) × 100.
How to Use This Calculator
To get an accurate analysis, input the purchase price and your financing details. Be sure to estimate expenses conservatively. Don't forget to account for Vacancy (usually 5-8% of rent) and Maintenance costs, as these are real expenses that will reduce your profit over time.
Why Cash Flow Matters More Than Appreciation
While property appreciation (increase in value over time) is a great bonus, it is speculative. Cash flow, however, is realized monthly. Relying on cash flow ensures your investment is sustainable even if the housing market stagnates or dips temporarily.
function calculateRental() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('ipPrice').value) || 0;
var downPercent = parseFloat(document.getElementById('ipDown').value) || 0;
var rate = parseFloat(document.getElementById('ipRate').value) || 0;
var years = parseFloat(document.getElementById('ipTerm').value) || 0;
var rent = parseFloat(document.getElementById('ipRent').value) || 0;
var vacancyRate = parseFloat(document.getElementById('ipVacancy').value) || 0;
var annualTaxIns = parseFloat(document.getElementById('ipTaxIns').value) || 0;
var monthlyMaint = parseFloat(document.getElementById('ipMaint').value) || 0;
// 2. Calculate Mortgage (P&I)
var downPayment = price * (downPercent / 100);
var loanAmount = price – downPayment;
var monthlyRate = (rate / 100) / 12;
var numPayments = years * 12;
var mortgage = 0;
if (rate > 0) {
mortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
} else {
mortgage = loanAmount / numPayments;
}
// 3. Calculate Expenses and Income
var monthlyTaxIns = annualTaxIns / 12;
var vacancyLoss = rent * (vacancyRate / 100);
var totalOperatingExpenses = monthlyTaxIns + monthlyMaint + vacancyLoss; // Excludes mortgage for NOI
var totalMonthlyExpenses = totalOperatingExpenses + mortgage; // Includes mortgage for Cash Flow
// 4. Calculate Key Metrics
var noiMonthly = rent – totalOperatingExpenses;
var noiAnnual = noiMonthly * 12;
var cashFlowMonthly = noiMonthly – mortgage;
var cashFlowAnnual = cashFlowMonthly * 12;
// Cash on Cash Return = Annual Cash Flow / Cash Invested (Down Payment)
// Note: Usually closing costs are added, but we'll use Down Payment for this scope
var cocReturn = 0;
if (downPayment > 0) {
cocReturn = (cashFlowAnnual / downPayment) * 100;
}
// Cap Rate = Annual NOI / Purchase Price
var capRate = 0;
if (price > 0) {
capRate = (noiAnnual / price) * 100;
}
// 5. Update HTML
// Helper function for currency formatting
var fmtMoney = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
var fmtPct = new Intl.NumberFormat('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 });
document.getElementById('resMortgage').innerText = fmtMoney.format(mortgage);
document.getElementById('resExpenses').innerText = fmtMoney.format(totalMonthlyExpenses);
document.getElementById('resNOI').innerText = fmtMoney.format(noiMonthly);
var cfElement = document.getElementById('resCashFlow');
cfElement.innerText = fmtMoney.format(cashFlowMonthly);
// Style Cash Flow based on positivity
if (cashFlowMonthly >= 0) {
cfElement.style.color = '#27ae60';
} else {
cfElement.style.color = '#c0392b';
}
document.getElementById('resCoC').innerText = fmtPct.format(cocReturn) + "%";
document.getElementById('resCap').innerText = fmtPct.format(capRate) + "%";
// Show results
document.getElementById('ipResultArea').style.display = 'block';
}