Successful real estate investing hinges on one critical metric: Cash Flow. This Rental Property Cash Flow Calculator is designed to help investors quickly analyze the viability of a potential investment property by breaking down income, expenses, and financing costs.
What is Cash Flow?
Cash flow represents the net amount of cash moving in and out of a business or investment. For rental properties, it is calculated as:
Gross Rental Income: The total money collected from tenants.
Minus Operating Expenses: Costs like property taxes, insurance, maintenance, property management fees, and HOA dues.
Minus Debt Service: Your monthly mortgage principal and interest payments.
A positive cash flow means the property is generating profit every month, while negative cash flow implies you are losing money to hold the asset.
Key Metrics Calculated
Our calculator provides detailed insights into three vital performance indicators:
1. Net Operating Income (NOI)
NOI is the annual income generated by the property after deducting all operating expenses but before deducting mortgage payments and taxes. It is a pure measure of the property's efficiency.
2. Cap Rate (Capitalization Rate)
The Cap Rate measures the natural rate of return on the property assuming it was bought with cash. It is calculated by dividing the NOI by the property's current market value. A higher Cap Rate generally indicates a better return, though often with higher risk.
3. Cash-on-Cash ROI
This is arguably the most important metric for investors using leverage (mortgages). It measures the annual cash flow relative to the actual cash you invested (down payment + closing costs). It answers the question: "What represents the return on the actual dollars I put into this deal?"
How to Improve Cash Flow
If your calculation shows negative or low cash flow, consider these strategies:
Increase Rent: Ensure your rental rates match current market value.
Reduce Expenses: Shop for cheaper insurance, appeal property taxes, or manage the property yourself to save on management fees.
Refinance: Securing a lower interest rate or extending the loan term can significantly lower monthly mortgage payments.
function calculateRental() {
// Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value);
var downPercent = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var termYears = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
// Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(rate) || isNaN(termYears) || isNaN(rent) || isNaN(expenses)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyRate = rate / 100 / 12;
var totalPayments = termYears * 12;
// Mortgage Calculation (Principal + Interest)
var monthlyMortgage = 0;
if (rate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
} else {
monthlyMortgage = loanAmount / totalPayments;
}
// Financial Metrics
var totalMonthlyExpenses = monthlyMortgage + expenses;
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Net Operating Income (NOI) = (Rent – Operating Expenses) * 12. Excludes Mortgage.
var monthlyNOI = rent – expenses;
var annualNOI = monthlyNOI * 12;
// Cap Rate = (Annual NOI / Price) * 100
var capRate = (annualNOI / price) * 100;
// Cash on Cash ROI = (Annual Cash Flow / Total Cash Invested) * 100
// Assuming Cash Invested is Down Payment for simplicity in this specific calculator version
var cashInvested = downPaymentAmount;
var cashOnCashROI = 0;
if (cashInvested > 0) {
cashOnCashROI = (annualCashFlow / cashInvested) * 100;
}
// Formatting Helpers
function formatMoney(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function formatPercent(num) {
return num.toFixed(2) + "%";
}
// Display Results
document.getElementById('displayMortgage').innerText = formatMoney(monthlyMortgage);
document.getElementById('displayTotalExpenses').innerText = formatMoney(totalMonthlyExpenses);
document.getElementById('displayCashFlow').innerText = formatMoney(monthlyCashFlow);
document.getElementById('displayNOI').innerText = formatMoney(annualNOI);
document.getElementById('displayCapRate').innerText = formatPercent(capRate);
document.getElementById('displayROI').innerText = formatPercent(cashOnCashROI);
// Change color for negative cash flow
var cashFlowElement = document.getElementById('displayCashFlow');
if (monthlyCashFlow < 0) {
cashFlowElement.style.color = '#dc3545';
} else {
cashFlowElement.style.color = '#28a745';
}
// Show Results Area
document.getElementById('results-area').style.display = 'block';
}