Rental Property Cash Flow Calculator
Income Sources
Variable Expenses
Fixed Expenses
Monthly Cash Flow Analysis
Gross Scheduled Income:
$0.00
Vacancy Loss:
-$0.00
Effective Gross Income:
$0.00
Operating Expenses (Mgmt, Maint, CapEx):
-$0.00
Fixed Expenses (Tax, Ins, HOA):
-$0.00
Net Operating Income (NOI):
$0.00
Mortgage Payment (Debt Service):
-$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Understanding Rental Property Cash Flow
Cash flow is the lifeblood of any real estate investment. It represents the net amount of money moving into or out of a business or property after all expenses have been paid. For rental property investors, calculating accurate cash flow is crucial for determining the long-term viability and profitability of an investment.
How is Rental Cash Flow Calculated?
The formula for rental property cash flow follows a specific hierarchy of deductions:
- Gross Scheduled Income: The total potential rent plus other income (parking, laundry, pet fees).
- Effective Gross Income: Gross income minus a vacancy allowance (money lost when the unit is empty).
- Net Operating Income (NOI): Effective Gross Income minus all operating expenses (taxes, insurance, management, maintenance, HOA). Note that mortgage payments are not included in NOI.
- Cash Flow: NOI minus debt service (monthly mortgage payments).
Key Metrics Explained
What is a good Vacancy Rate?
While this varies by location, a conservative estimate for most residential markets is 5% to 8%. This accounts for turnover periods between tenants. Never assume 0% vacancy in your calculations.
Capital Expenditures (CapEx) vs. Maintenance
Maintenance covers routine fixes like a leaky faucet or painting. CapEx reserves are for big-ticket items that eventually wear out, like the roof, HVAC system, or water heater. Allocating 5-10% for each ensures you have cash reserves when these expensive repairs arise.
Why Calculate Before You Buy?
Using a rental property cash flow calculator allows you to stress-test a property before purchase. If a property only cash flows with 0% vacancy and no repairs, it is a high-risk investment. A solid investment should show positive cash flow even with conservative estimates for expenses.
The 1% Rule
A common "rule of thumb" for initial screening is the 1% rule, which states that the monthly rent should be at least 1% of the purchase price. While this doesn't replace a full cash flow analysis, it helps filter out properties that are unlikely to generate positive cash flow.