function calculateRentalProfit() {
// 1. Get input values
var price = parseFloat(document.getElementById('rp_price').value);
var downPercent = parseFloat(document.getElementById('rp_down').value);
var interestRate = parseFloat(document.getElementById('rp_rate').value);
var termYears = parseFloat(document.getElementById('rp_term').value);
var monthlyRent = parseFloat(document.getElementById('rp_rent').value);
var otherExpenses = parseFloat(document.getElementById('rp_expenses').value);
var vacancyRate = parseFloat(document.getElementById('rp_vacancy').value);
var maintenanceRate = parseFloat(document.getElementById('rp_maintenance').value);
// 2. Validation
if (isNaN(price) || isNaN(downPercent) || isNaN(interestRate) || isNaN(termYears) || isNaN(monthlyRent)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 3. Calculation Logic
// Loan Calculations
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var monthlyInterest = (interestRate / 100) / 12;
var numberOfPayments = termYears * 12;
// Mortgage PMT Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyInterest * Math.pow(1 + monthlyInterest, numberOfPayments)) / (Math.pow(1 + monthlyInterest, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
// Operating Expenses
var vacancyCost = monthlyRent * (vacancyRate / 100);
var maintenanceCost = monthlyRent * (maintenanceRate / 100);
var totalOperatingExpenses = otherExpenses + vacancyCost + maintenanceCost; // Without mortgage
var totalMonthlyExpenses = totalOperatingExpenses + monthlyMortgage; // With mortgage
// Income & Cash Flow
var effectiveGrossIncome = monthlyRent – vacancyCost; // Rent minus vacancy loss
var netOperatingIncome = (monthlyRent – vacancyCost) – (otherExpenses + maintenanceCost); // NOI (Annualized usually, but here monthly)
var monthlyCashFlow = effectiveGrossIncome – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = netOperatingIncome * 12;
// ROI Metrics
var totalCashInvested = downPaymentAmount; // Simplified (could include closing costs)
var cashOnCashROI = (annualCashFlow / totalCashInvested) * 100;
var capRate = (annualNOI / price) * 100;
// 4. Update UI
document.getElementById('rp_results_section').style.display = 'block';
document.getElementById('res_mortgage').innerText = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_total_expenses').innerText = "$" + totalMonthlyExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cfElement = document.getElementById('res_cashflow');
cfElement.innerText = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
cfElement.className = monthlyCashFlow >= 0 ? "rp-result-value rp-positive" : "rp-result-value rp-negative";
var roiElement = document.getElementById('res_roi');
roiElement.innerText = cashOnCashROI.toFixed(2) + "%";
roiElement.className = cashOnCashROI >= 0 ? "rp-result-value rp-positive" : "rp-result-value rp-negative";
document.getElementById('res_cap').innerText = capRate.toFixed(2) + "%";
}
Understanding Rental Property Cash Flow Analysis
Investing in real estate is one of the most reliable ways to build wealth, but it requires careful financial planning. The success of a rental property hinges on its Cash Flow—the net amount of money moving in and out of your investment business. A positive cash flow means the property generates more income than it costs to own and operate.
How This Calculator Works
Our Rental Property ROI Calculator uses industry-standard formulas to help you evaluate the profitability of a potential investment. Here is a breakdown of the key inputs and metrics used:
Purchase Price & Down Payment: These determine your initial loan amount and your "skin in the game" (initial cash investment).
Vacancy Rate: No property is occupied 100% of the time. We deduct a percentage of rent (typically 5-8%) to account for turnover periods.
Maintenance Reserves: Smart investors set aside a portion of monthly rent (usually 5-10%) for future repairs like water heaters or roof patches.
Key Metrics Explained
1. Net Monthly Cash Flow
This is your "take-home" profit each month. It is calculated by taking your total rental income and subtracting vacancy losses, operating expenses (taxes, insurance, HOA), maintenance reserves, and the mortgage payment.
Formula: Effective Gross Income – Total Expenses – Debt Service = Cash Flow
2. Cash on Cash ROI (Return on Investment)
This metric measures the annual return on the actual cash you invested, rather than the total value of the property. It is crucial because it tells you how hard your specific dollars are working compared to other investments like the stock market.
Example: If you invest $50,000 cash (down payment) and the property generates $5,000 in positive cash flow per year, your Cash on Cash ROI is 10%.
3. Cap Rate (Capitalization Rate)
The Cap Rate measures the property's natural rate of return assuming you bought it with all cash (no mortgage). It helps you compare the profitability of different properties regardless of how they are financed. A higher Cap Rate generally indicates a better potential return, though often with higher risk.
Formula: Net Operating Income (NOI) / Purchase Price
What is a Good ROI for Rental Property?
While targets vary by investor and market strategy, many real estate experts look for a Cash on Cash ROI of 8-12%. However, in high-appreciation markets, investors might accept a lower monthly cash flow (or lower ROI) in exchange for significant long-term growth in the property's value.