Rental Property Cash Flow Calculator
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Estimated Monthly Cash Flow
$0.00
$0.00 / year
Mortgage Payment (P&I)
$0.00
Cash on Cash Return
0.00%
Total Cash Invested
$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 typically hinges on one critical metric: Cash Flow. This Rental Property Cash Flow Calculator helps investors determine the viability of a potential rental unit by analyzing income against all associated expenses.
What is Positive Cash Flow?
Positive cash flow occurs when a property's gross rental income exceeds the sum of all expenses, including the mortgage, taxes, insurance, and maintenance. This surplus income is profit in your pocket. Conversely, negative cash flow means you are losing money every month to hold the property, which is generally sustainable only if you are banking on significant property appreciation.
Expert Tip: Always account for "silent" expenses like vacancy (when the property sits empty) and maintenance. A common mistake beginners make is calculating profit based solely on Rent minus Mortgage.
Key Metrics Explained
- Net Operating Income (NOI): This is your total income minus operating expenses (excluding mortgage payments). It measures the profitability of the property itself.
- Cash on Cash Return: This metric calculates the cash income earned on the cash invested. It is calculated as (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100%. This is often considered the most important metric for ROI because it tells you how hard your actual dollars are working.
- Vacancy Rate: Real estate is rarely occupied 100% of the time. A safe estimate for most residential markets is 5% to 8%, meaning you account for the property being empty for a few weeks each year.
Example Calculation
Imagine you purchase a property for $200,000 with 20% down ($40,000). Your loan amount is $160,000.
- Rental Income: $2,000/month
- Mortgage (P&I): ~$1,011/month (at 6.5% interest)
- Taxes & Insurance: ~$350/month
- Reserves (Vacancy/Maint): ~$200/month
In this scenario, your total expenses might be around $1,561. Your Monthly Cash Flow would be roughly $439. This gives you a financial buffer and passive income while the tenant pays down your principal.
How to Improve Cash Flow
If the calculator shows a negative or low number, consider these strategies:
- Increase Rent: Can you add value with minor renovations (fresh paint, new fixtures) to justify higher rent?
- Decrease Expenses: Shop around for cheaper insurance or challenge your property tax assessment.
- Larger Down Payment: Putting more money down reduces the mortgage payment, instantly boosting monthly cash flow, though it may lower your Cash on Cash return percentage.
function validateInput(input) {
if (input.value 0) {
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / (termYears * 12);
}
// 3. Calculate Monthly Expenses
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
var monthlyVacancy = rent * (vacancyRate / 100);
var monthlyMaint = rent * (maintRate / 100);
var totalOperatingExpenses = monthlyTax + monthlyIns + monthlyHOA + monthlyVacancy + monthlyMaint;
var totalMonthlyExpenses = totalOperatingExpenses + monthlyMortgage;
// 4. Calculate Cash Flow
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate Cash on Cash Return
// Estimate closing costs as 3% of purchase price roughly, or just use down payment
// For simplicity and accuracy of pure cash invested, let's assume Down Payment + 3% Closing Costs
var closingCosts = price * 0.03;
var totalCashInvested = downPaymentAmount + closingCosts;
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
// 6. Display Results
document.getElementById('results-area').style.display = 'block';
// Helper for formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('monthlyCashFlow').innerHTML = formatter.format(monthlyCashFlow);
document.getElementById('annualCashFlow').innerHTML = formatter.format(annualCashFlow) + " / year";
document.getElementById('totalExpenses').innerHTML = formatter.format(totalMonthlyExpenses);
document.getElementById('mortgagePayment').innerHTML = formatter.format(monthlyMortgage);
document.getElementById('totalCashInvested').innerHTML = formatter.format(totalCashInvested) + "
(incl. est. 3% closing costs)";
document.getElementById('cashOnCash').innerHTML = cashOnCash.toFixed(2) + "%";
// Styling for positive/negative cash flow
var cashFlowElement = document.getElementById('monthlyCashFlow');
if (monthlyCashFlow >= 0) {
cashFlowElement.style.color = "#27ae60";
cashFlowElement.classList.remove("negative");
} else {
cashFlowElement.style.color = "#c0392b";
cashFlowElement.classList.add("negative");
}
}