Rental Property Cash Flow Calculator
Please enter valid positive numbers for all fields.
Monthly Mortgage Payment:
$0.00
Total Monthly Expenses:
$0.00
Net Operating Income (NOI – Annual):
$0.00
Cap Rate:
0.00%
Cash on Cash ROI:
0.00%
Monthly Net Cash Flow:
$0.00
Mastering Rental Property Analysis
Investing in real estate is a numbers game. Whether you are a seasoned investor or buying your first duplex, the difference between a liability and an asset comes down to one metric: Cash Flow. This calculator is designed to help you analyze potential investment properties by breaking down income, expenses, and returns.
How to Calculate Cash Flow
Cash flow is the profit you bring in each month after all expenses are paid. The formula is simple in theory but requires accuracy:
Cash Flow = Total Monthly Rental Income – (Mortgage Payment + Operating Expenses)
Operating expenses include property taxes, landlord insurance, HOA fees, vacancy reserves, and maintenance costs. If the result is positive, the property pays you to own it. If it is negative, you are subsidizing the property from your own pocket.
Understanding Key Metrics
- Cap Rate (Capitalization Rate): This measures the natural rate of return on the property assuming you bought it with cash. It is calculated as (Net Operating Income / Purchase Price) × 100. A higher cap rate generally indicates a better return, though often with higher risk.
- Cash on Cash ROI: This is arguably the most important metric for leveraged investors. It measures the return on the actual cash you invested (Down Payment + Closing Costs). A 10-12% Cash on Cash return is often considered a strong benchmark in many markets.
- NOI (Net Operating Income): This is your annual income minus operating expenses, excluding the mortgage. It helps banks determine if the property generates enough income to cover the debt.
The 1% Rule
A common "rule of thumb" for quick screening is the 1% rule. It states that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for $2,000/month. While hard to find in expensive markets, properties that meet this rule usually generate strong positive cash flow.