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 analyze the numbers with precision. This Rental Property Cash Flow Calculator helps you evaluate the potential financial performance of a specific investment opportunity.
Key Metrics Explained
1. Monthly Cash Flow
Cash flow is the lifeblood of any rental investment. It represents the money remaining after all expenses (mortgage, taxes, insurance, repairs, vacancy reserves) are paid from the rental income. A positive cash flow indicates a healthy investment that generates passive income, while negative cash flow means the property is costing you money every month.
2. Cash on Cash Return (CoC)
The Cash on Cash Return is perhaps the most important metric for investors using leverage (mortgages). It measures the annual cash flow relative to the actual cash invested (down payment + closing costs + rehab costs). Unlike ROI, which might account for equity buildup, CoC focuses purely on liquid cash returns.
Formula: (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100
Target: Many investors aim for a CoC return of 8-12% or higher.
3. Cap Rate (Capitalization Rate)
The Cap Rate measures the natural rate of return of the property assuming it was bought entirely with cash. It helps compare properties regardless of financing methods.
Formula: (Net Operating Income / Purchase Price) x 100
4. Net Operating Income (NOI)
NOI calculates the profitability of income-generating real estate properties before adding in any costs from financing or taxes. It is the gross income minus operating expenses (maintenance, HOA, vacancy, property management) but excluding the mortgage payment.
How to Use This Calculator
To get the most accurate results, input realistic estimates for expenses like vacancy and maintenance. A common rule of thumb is to set aside 5% to 10% of gross rent for repairs and another 5% for vacancy. Don't forget to include annual expenses like property taxes and insurance, as these can significantly impact your bottom line.
function calculateRentalReturns() {
// 1. Get Inputs
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var rehabCosts = parseFloat(document.getElementById('rehabCosts').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 0;
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var propertyTaxYearly = parseFloat(document.getElementById('propertyTax').value) || 0;
var insuranceYearly = parseFloat(document.getElementById('insurance').value) || 0;
var hoaMonthly = parseFloat(document.getElementById('hoa').value) || 0;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
var maintenanceRate = parseFloat(document.getElementById('maintenanceRate').value) || 0;
// 2. Validate essential inputs to prevent NaN errors
if (purchasePrice <= 0 || monthlyRent 0 && interestRate > 0 && loanTerm > 0) {
// Standard Amortization Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mathPower = Math.pow(1 + monthlyInterestRate, numberOfPayments);
monthlyMortgage = loanAmount * (monthlyInterestRate * mathPower) / (mathPower – 1);
}
// 4. Calculate Operating Expenses
var vacancyCost = monthlyRent * (vacancyRate / 100);
var maintenanceCost = monthlyRent * (maintenanceRate / 100);
var monthlyTax = propertyTaxYearly / 12;
var monthlyInsurance = insuranceYearly / 12;
var totalOperatingExpenses = vacancyCost + maintenanceCost + monthlyTax + monthlyInsurance + hoaMonthly;
var totalMonthlyExpenses = totalOperatingExpenses + monthlyMortgage;
// 5. Calculate Metrics
// Net Operating Income (NOI) = Gross Income – Operating Expenses (No Mortgage)
var monthlyNOI = monthlyRent – totalOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// Cash Flow = NOI – Mortgage
var monthlyCashFlow = monthlyNOI – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// Total Cash Invested
var totalCashInvested = downPayment + closingCosts + rehabCosts;
// Cash on Cash Return = Annual Cash Flow / Total Cash Invested
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate = Annual NOI / Purchase Price
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// 6. Display Results
document.getElementById('resCashFlow').innerHTML = formatCurrency(monthlyCashFlow);
document.getElementById('resCoC').innerHTML = cocReturn.toFixed(2) + '%';
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + '%';
document.getElementById('resNOI').innerHTML = formatCurrency(monthlyNOI);
document.getElementById('resExpenses').innerHTML = formatCurrency(totalMonthlyExpenses);
document.getElementById('resMortgage').innerHTML = formatCurrency(monthlyMortgage);
// Show result container
document.getElementById('resultsArea').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 });
}