Rental Property Cash Flow Calculator

The Rental Property Cash Flow Calculator underwrites a rental the way a lender would: rent and other income on one side, vacancy, operating expenses, and the mortgage payment on the other, producing monthly and annual cash flow plus the two return ratios investors quote, cash-on-cash return and cap rate. Enter the purchase and loan details, the rent, and the expense lines.

How It Works

The loan amount is the price minus your down payment, and the monthly mortgage payment follows the standard amortization formula over the loan term. Vacancy and management are charged as percentages of gross rent. Net operating income (NOI) is rental income minus operating expenses (taxes, insurance, HOA, maintenance, vacancy, and management) but before the mortgage, and cash flow subtracts the mortgage from NOI:

$\text{Monthly cash flow}=\text{NOI}-\text{Mortgage payment}$

$\text{Cap rate}=\frac{\text{Annual NOI}}{\text{Property price}}\times100\qquad \text{Cash-on-cash}=\frac{\text{Annual cash flow}}{\text{Down payment + closing costs}}\times100$

Parameters

| Input | Required | Meaning | |---|---|---| | Property price | Yes | Purchase price | | Down payment % | Yes | Share paid upfront; the rest is the loan | | Interest rate / loan term | Yes | Mortgage pricing and years | | Closing costs | No | Added to your initial investment | | Monthly rent / other income | Yes / No | Contract rent plus laundry, parking, and similar | | Taxes, insurance, HOA, maintenance | Yes | Monthly operating expense lines | | Vacancy rate % | Yes | Share of rent lost to empty periods | | Management fee % | Yes | Share of rent paid to a manager (0 if self-managed) |

Worked example

A $300,000 property with 20$240,000 loan at 6.5% over 30 years: a payment of $1,516.96 a month. Rent is$2,600. Vacancy at 5% costs $130 and management at 8$208; with $250 taxes,$120 insurance, and $150 maintenance, operating expenses total$858. NOI is 2,600 - 858 = $1,742 a month, and cash flow is 1,742 - 1,516.96 = **+$225.04 a month**, $2,700 a year. Against the$64,500 initial investment ($60,000 down plus$4,500 closing), cash-on-cash return is 4.19%, and the cap rate is (1,742 x 12) / 300,000 = 6.97%. That is a modest but real deal: the cap rate above the mortgage rate is what makes the leverage help instead of hurt.

Cap rate versus cash-on-cash

Cap rate ignores financing entirely and measures the property; cash-on-cash includes your actual loan and measures your money. The same property bought in cash returns the cap rate on a much larger investment. When the cap rate exceeds the mortgage interest rate, leverage amplifies returns (positive leverage); below it, leverage works against you and a bigger down payment can paradoxically produce better cash flow. Compare both numbers before comparing properties, because a high cash-on-cash built on a low cap rate and cheap debt is fragile to rate resets.

The expenses everyone under-enters

Vacancy at 5% is one empty month roughly every two years; new landlords often enter zero and overstate income from day one. Maintenance at a flat figure ignores capital items: roofs, HVAC, and appliances arrive as four-figure events, and many underwriters reserve 5 to 10% of rent for capital expenditure on top of routine maintenance. This calculator has no separate capex line, so fold a reserve into the maintenance figure if you want a conservative answer. Management at 0% is honest only if your own time is genuinely free.

Limitations

The model is a single-period snapshot: no rent growth, expense inflation, tax treatment (including depreciation and negative gearing), refinancing, or appreciation. It assumes the expense lines you enter are monthly and the vacancy and management percentages apply to gross rent. It is an underwriting screen, not a forecast or tax advice.

Screening rules, and why this deal breaks one

The 1% rule says monthly rent should reach 1% of the purchase price: $3,000 for this property. At$2,600 it fails the screen, yet it still cash-flows $225 a month, because the rule ignores the interest rate, the down payment, and the expense load, all of which this calculator models explicitly. Screens are for sorting a hundred listings in an afternoon; the full underwrite here is for the three that survive. The 50$1,300 of expenses against the $858 entered, a useful pessimism check: rerun with maintenance and vacancy raised until expenses approach that level and see whether the deal still stands.

Stress-test before you sign

Raise vacancy from 5% to 10% on the worked example: vacancy cost becomes $260, operating expenses$988, NOI $1,612, and cash flow falls to$95.04 a month, still positive but thin. That single-variable test is the minimum diligence; follow it with a rate shock if your loan can reset, and a rent cut to the lowest comparable in the building. A deal that survives all three at roughly break-even or better has a margin of safety; a deal that needs every assumption to hold simultaneously has none, whatever its headline cash-on-cash says.

Frequently Asked Questions

Is positive cash flow guaranteed if the calculator shows it?

No. It shows cash flow under your assumptions. A long vacancy, a major repair, or a rate reset can flip a thin positive negative, which is why reserves and conservative vacancy inputs matter.

Why is my cash-on-cash higher than the cap rate?

Leverage. Your cash invested is only the down payment and closing costs, while the return is generated by the whole property. When the cap rate beats the mortgage rate, that leverage raises your cash return above the property's own return.

Should I include appreciation in cash flow?

No. Appreciation is not cash until a sale or refinance. Evaluate it separately as a possible bonus; a deal that only works with assumed appreciation is speculation, not cash-flow investing.