Rental Property Cash Flow & ROI Calculator
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Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but it relies heavily on the mathematics of the deal. The difference between a profitable asset and a financial liability often comes down to Cash Flow. This calculator helps you analyze the viability of a rental property by breaking down income, operating expenses, and debt service.
What is Cash on Cash Return?
While "Cash Flow" tells you how much money you net every month, Cash on Cash Return (CoC ROI) tells you how hard your money is working. It is calculated by dividing your annual pre-tax cash flow by the total cash invested (Down Payment + Closing Costs + Rehab Costs).
For example, if you invest $50,000 cash to buy a property and it generates $5,000 in net positive cash flow per year, your CoC ROI is 10%. This is a crucial metric for comparing real estate against other investment vehicles like stocks or bonds.
Key Metrics Explained
- NOI (Net Operating Income): The total income generated by the property minus all operating expenses. Crucially, NOI excludes mortgage payments. It measures the profitability of the property itself, independent of financing.
- Cap Rate: Calculated as (Annual NOI / Purchase Price). It represents the rate of return on the property if you bought it in all cash. It helps compare properties in different markets regardless of financing.
- CapEx (Capital Expenditures): These are major expenses that don't happen monthly but will happen eventually (e.g., a new roof, HVAC replacement). Smart investors set aside a percentage of rent (usually 5-10%) every month to prepare for these costs.
- Vacancy Rate: No property is occupied 100% of the time. Factoring in a 5-8% vacancy rate ensures your calculations are realistic and conservative.
The 1% Rule
A quick rule of thumb used by investors to screen properties is the "1% Rule." This suggests that the monthly rent should be at least 1% of the purchase price. For a $200,000 home, the rent should be at least $2,000. While this rule is harder to meet in expensive markets, it remains a solid benchmark for cash flow potential.
function calculateRental() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPercent = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var closingCosts = parseFloat(document.getElementById('closingCosts').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var taxYearly = parseFloat(document.getElementById('propertyTax').value) || 0;
var insuranceYearly = parseFloat(document.getElementById('insurance').value) || 0;
var hoaMonthly = parseFloat(document.getElementById('hoa').value) || 0;
var vacancyPercent = parseFloat(document.getElementById('vacancyRate').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var capexPercent = parseFloat(document.getElementById('capex').value) || 0;
// 2. Calculate Initial Investment
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var totalCashInvested = downPaymentAmount + closingCosts;
// 3. Calculate Mortgage (Principal + Interest)
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = years * 12;
var mortgagePayment = 0;
if (interestRate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
} else {
mortgagePayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
if (isNaN(mortgagePayment)) mortgagePayment = 0;
// 4. Calculate Income
var totalMonthlyIncome = rent + otherIncome;
// 5. Calculate Operating Expenses (Monthly)
var vacancyCost = totalMonthlyIncome * (vacancyPercent / 100);
var maintCost = totalMonthlyIncome * (maintPercent / 100);
var capexCost = totalMonthlyIncome * (capexPercent / 100);
var taxMonthly = taxYearly / 12;
var insuranceMonthly = insuranceYearly / 12;
var totalOperatingExpenses = taxMonthly + insuranceMonthly + hoaMonthly + vacancyCost + maintCost + capexCost;
// 6. Calculate Metrics
var noiMonthly = totalMonthlyIncome – totalOperatingExpenses;
var noiAnnual = noiMonthly * 12;
var totalMonthlyExpenses = totalOperatingExpenses + mortgagePayment;
var monthlyCashFlow = totalMonthlyIncome – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var capRate = (price > 0) ? (noiAnnual / price) * 100 : 0;
var cashOnCashRoi = (totalCashInvested > 0) ? (annualCashFlow / totalCashInvested) * 100 : 0;
// 7. Display Results
document.getElementById('resCashFlow').innerHTML = formatCurrency(monthlyCashFlow);
document.getElementById('resCoc').innerHTML = cashOnCashRoi.toFixed(2) + "%";
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
document.getElementById('resExpenses').innerHTML = formatCurrency(totalMonthlyExpenses);
document.getElementById('resNOI').innerHTML = formatCurrency(noiMonthly);
document.getElementById('resCashNeeded').innerHTML = formatCurrency(totalCashInvested);
// Color coding for Cash Flow
var cashFlowEl = document.getElementById('resCashFlow');
if (monthlyCashFlow >= 0) {
cashFlowEl.classList.remove('negative');
cashFlowEl.classList.add('positive');
} else {
cashFlowEl.classList.remove('positive');
cashFlowEl.classList.add('negative');
}
// Show results section
document.getElementById('calcResults').style.display = 'block';
}
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return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}