function calculateRental() {
// Get Inputs
var price = parseFloat(document.getElementById('rp_price').value);
var downPercent = parseFloat(document.getElementById('rp_down').value);
var closingCosts = parseFloat(document.getElementById('rp_closing').value);
var repairBudget = parseFloat(document.getElementById('rp_repair_budget').value);
var interestRate = parseFloat(document.getElementById('rp_rate').value);
var loanTerm = parseFloat(document.getElementById('rp_term').value);
var monthlyRent = parseFloat(document.getElementById('rp_rent').value);
var vacancyRate = parseFloat(document.getElementById('rp_vacancy').value);
var annualTax = parseFloat(document.getElementById('rp_tax').value);
var annualInsurance = parseFloat(document.getElementById('rp_insurance').value);
var monthlyHoa = parseFloat(document.getElementById('rp_hoa').value);
var mgmtFeePercent = parseFloat(document.getElementById('rp_management').value);
var maintPercent = parseFloat(document.getElementById('rp_maintenance').value);
var capexPercent = parseFloat(document.getElementById('rp_capex').value);
// Validation
if (isNaN(price) || isNaN(interestRate) || isNaN(monthlyRent)) {
return; // Exit silently or handle error if needed
}
// 1. Initial Cash Investment
var downPaymentAmount = price * (downPercent / 100);
var totalCashInvested = downPaymentAmount + closingCosts + repairBudget;
// 2. Mortgage Calculation
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (interestRate > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 3. Income Analysis
var vacancyCost = monthlyRent * (vacancyRate / 100);
var effectiveIncome = monthlyRent – vacancyCost;
// 4. Expense Analysis
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var mgmtCost = monthlyRent * (mgmtFeePercent / 100);
var maintCost = monthlyRent * (maintPercent / 100);
var capexCost = monthlyRent * (capexPercent / 100);
var totalOperatingExpenses = monthlyTax + monthlyInsurance + monthlyHoa + mgmtCost + maintCost + capexCost;
var totalExpenses = totalOperatingExpenses + monthlyMortgage;
// 5. Results
var monthlyCashFlow = effectiveIncome – totalExpenses;
var annualCashFlow = monthlyCashFlow * 12;
var annualNOI = (effectiveIncome – totalOperatingExpenses) * 12;
// 6. Returns
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// Display Results
document.getElementById('rp-result').style.display = 'block';
document.getElementById('res_income').innerText = "$" + effectiveIncome.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_opex').innerText = "$" + totalOperatingExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_mortgage').innerText = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById('res_cashflow');
cashFlowEl.innerText = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlyCashFlow >= 0) {
document.getElementById('row_cashflow').className = "rp-result-row highlight";
cashFlowEl.style.color = "#27ae60";
} else {
document.getElementById('row_cashflow').className = "rp-result-row highlight negative";
cashFlowEl.style.color = "#c0392b";
}
document.getElementById('res_coc').innerText = cashOnCash.toFixed(2) + "%";
document.getElementById('res_cap').innerText = capRate.toFixed(2) + "%";
document.getElementById('res_cash_needed').innerText = "$" + totalCashInvested.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0});
}
// Run once on load to show example
window.onload = function() {
calculateRental();
};
Understanding Rental Property Cash Flow
Investing in real estate is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must analyze the numbers with precision. This Rental Property Cash Flow Calculator helps you determine whether a potential investment will generate positive monthly income or drain your savings.
What is Positive Cash Flow?
Positive cash flow occurs when a property's gross monthly income exceeds all its expenses. Expenses aren't just the mortgage payment; they include vacancy rates, repairs, capital expenditures (CapEx), taxes, insurance, and management fees. A property with positive cash flow puts money in your pocket every month, providing a safety net against market fluctuations.
Key Metrics in Real Estate Analysis
When analyzing a rental deal, two metrics are critical for comparison:
Cash on Cash Return (CoC): This measures the annual return on the actual cash you invested (down payment, closing costs, and repairs). It is calculated as (Annual Cash Flow / Total Cash Invested) × 100. A CoC return of 8-12% is generally considered good in many markets.
Cap Rate (Capitalization Rate): This measures the natural rate of return of the property regardless of financing. It is calculated as (Net Operating Income / Purchase Price) × 100. Cap rates help you compare the profitability of similar properties in different areas.
The 50% Rule and the 1% Rule
While a calculator provides exact numbers, investors often use "rules of thumb" for quick screening:
The 1% Rule: The monthly rent should be at least 1% of the purchase price. For example, a $200,000 home should rent for $2,000/month.
The 50% Rule: Estimate that 50% of your gross rental income will go toward operating expenses (excluding the mortgage). If the remaining 50% can cover the mortgage and leave profit, it's likely a good deal.
How to Improve Cash Flow
If your calculation shows negative cash flow, consider these adjustments before walking away:
Lower the Purchase Price: Negotiate a better deal to reduce your loan amount and mortgage payment.
Increase the Down Payment: Investing more cash upfront lowers monthly debt service, instantly boosting monthly cash flow (though it may lower your Cash on Cash return).
Value-Add Improvements: Can you renovate the kitchen or add a bedroom to increase the monthly rent significantly?
Frequently Asked Questions
What is a good cash flow per door?
Many investors aim for at least $100 to $200 per unit per month in pure profit after all expenses and savings for repairs. However, this varies by market strategy. Appreciation-focused investors might accept lower cash flow, while income-focused investors demand higher monthly returns.
Should I include vacancy and maintenance if the property is new?
Yes. Absolutely. Even a brand new property will eventually need repairs, and tenants will eventually move out. Failing to account for vacancy (typically 5-8%) and maintenance (5-10%) is the most common mistake novice investors make, leading to unexpected losses.