Rental Property Cash Flow Calculator

Find out if a rental property will actually make money before you buy it with our free Rental Property Cash Flow Calculator. Enter the property price, down payment, mortgage rate, monthly rent, vacancy rate, property taxes, insurance, maintenance, property management and other expenses. The calculator instantly estimates your monthly cash flow, annual cash flow, net operating income (NOI), cap rate, cash-on-cash return, debt service coverage ratio and the minimum monthly rent needed to break even. Whether you’re comparing your first rental property or adding another property to your portfolio, this calculator gives you a clear picture of the numbers before you invest.

How to Use the Rental Property Cash Flow Calculator

A rental property can look like a great investment until you add the mortgage, property taxes, vacancy, repairs, insurance and all the other expenses that come with being a landlord. Our rental property calculator puts those numbers together so you can estimate whether a property is likely to produce positive or negative cash flow.

The calculator also gives you several common real estate investing measurements including net operating income, cap rate, cash-on-cash return and debt service coverage ratio. Here is how to use each section.

Step 1: Enter the Property Purchase Price

Start by entering the amount you expect to pay for the rental property. For example, if you are considering a $400,000 house, condo or duplex, enter 400000.

The purchase price is used when calculating your mortgage amount and capitalization rate. If you want to experiment with mortgage payments separately, you can also use our Mortgage Calculator.

Step 2: Enter Your Down Payment

Enter the amount of cash you plan to put down on the property. If the property costs $400,000 and you are putting $80,000 down, the calculator assumes the remaining $320,000 is financed by the mortgage.

A larger down payment normally lowers the mortgage payment and can improve monthly cash flow, but it also increases the amount of your own cash tied up in the investment. This is one reason the calculator shows both monthly cash flow and cash-on-cash return.

Step 3: Enter the Mortgage Rate and Amortization

Enter the annual mortgage interest rate and the number of years over which the loan will be amortized. The calculator uses these numbers to estimate the monthly principal and interest payment.

For a more detailed mortgage analysis including principal, interest and different payment schedules, try our Mortgage Estimate Calculator.

Step 4: Enter the Expected Monthly Rent

Enter the total scheduled rent you expect the property to produce each month. If a duplex rents for $1,500 per unit, for example, you would enter $3,000 in monthly rent.

Try to use a realistic market rent rather than the highest rent you hope to achieve. Even a difference of $100 or $200 per month can have a noticeable impact on annual cash flow and your return on investment.

Step 5: Add Other Rental Income

A rental property can produce income from more than rent. Enter recurring monthly income from parking stalls, storage lockers, laundry machines, pet fees or other sources in the Other Monthly Income field.

Step 6: Enter an Estimated Vacancy Rate

A property may not be occupied 365 days a year. Tenants move out, units require repairs between renters and sometimes it takes time to find another tenant. The vacancy field reduces expected rental income to account for this possibility.

For example, entering a 5% vacancy rate on $2,500 monthly rent creates an estimated vacancy allowance of $125 per month. That does not mean the property will literally lose $125 every month; it spreads the assumed annual vacancy cost across the year so you can budget more realistically.

Step 7: Enter the Property Expenses

Rental income by itself tells you very little about whether a property is profitable. Enter as many of the actual property expenses as you can, including:

• Property taxes: The annual property tax bill.
• Insurance: Annual landlord or property insurance.
• Condo or HOA fees: Monthly condominium, strata or homeowners association fees.
• Maintenance and repairs: An estimated percentage of rent reserved for ongoing repairs and maintenance.
• Property management: Enter a percentage if you plan to pay somebody to manage the rental.
• Utilities: Electricity, natural gas, water, garbage or other utilities paid by the landlord.
• Other expenses: Recurring costs that do not fit into the other categories.

Step 8: Enter Closing and Renovation Costs

If you want an accurate cash-on-cash return, include the money you will spend to acquire and prepare the property. The calculator adds the down payment, closing costs and initial renovation costs together to estimate your total cash invested.

If the property needs major work before it can be rented, estimate those costs carefully. For a basement rental project, our Basement Cost Calculator can help estimate the cost of finishing or creating a basement suite.

Step 9: Click “Calculate Rental Cash Flow”

Once you have entered the property information, click “Calculate Rental Cash Flow.” The calculator will instantly show whether the property has estimated positive or negative monthly cash flow.

You will also see the estimated cap rate, cash-on-cash return, net operating income, mortgage payment, debt service coverage ratio and break-even rent.

How We Calculate Rental Property Cash Flow

Rental property cash flow is the money remaining after the property’s income is reduced by operating expenses and mortgage payments. Instead of looking only at rent minus the mortgage payment, our calculator includes vacancy and many of the common costs of owning a rental property.

The basic calculation is:

Monthly Cash Flow = Effective Rental Income − Operating Expenses − Mortgage Payment

If the result is positive, the property generates estimated positive cash flow. If the result is negative, you may need to contribute additional money each month to cover the property’s expenses.

What Is Net Operating Income (NOI)?

Net operating income, commonly called NOI, is the income produced by a property after estimated operating expenses but before mortgage payments.

Our calculator estimates NOI using:

NOI = Effective Rental Income − Operating Expenses

Mortgage principal and interest are excluded from NOI because NOI is designed to measure the performance of the property itself independently of how an individual investor finances it.

What Is Cap Rate?

The capitalization rate, normally called the cap rate, compares a property’s annual net operating income to its purchase price or value.

The formula used by our calculator is:

Cap Rate = Annual NOI ÷ Property Price × 100

Suppose a $400,000 rental property produces $24,000 in annual NOI. The cap rate would be 6%.

A higher cap rate can indicate more income relative to the property price, but it does not automatically mean a property is a better investment. Location, property condition, tenant quality, appreciation potential and risk also matter.

What Is Cash-on-Cash Return?

Cash-on-cash return measures the annual cash flow you receive compared with the amount of your own cash invested in the property.

Our calculator uses:

Cash-on-Cash Return = Annual Cash Flow ÷ Total Cash Invested × 100

Total cash invested includes the down payment, closing costs and initial renovation costs entered into the calculator.

This can be useful when comparing real estate with other investments. You can also compare long-term investment scenarios with our Investment Calculator.

What Is DSCR on a Rental Property?

DSCR stands for Debt Service Coverage Ratio. It compares the property’s net operating income with the amount required to make its loan payments.

The calculator uses:

DSCR = Annual NOI ÷ Annual Mortgage Payments

A DSCR of 1.00 means estimated NOI is equal to annual mortgage debt service. A DSCR above 1.00 means NOI exceeds the estimated loan payments, while a number below 1.00 means NOI alone is not enough to cover the debt service.

What Is Break-Even Rent?

The break-even rent is the approximate monthly rent needed for the property’s estimated cash flow to reach zero after accounting for the mortgage, vacancy allowance and the expenses entered into the calculator.

This can be one of the most useful numbers when evaluating a property. If comparable units in the neighborhood rent for $2,000 per month but your property needs $2,500 just to break even, the deal may require a larger down payment, lower purchase price, lower expenses or another source of income.

Rental Property Cash Flow Example

Imagine you are looking at a rental property with the following numbers:

• Purchase price: $400,000
• Down payment: $80,000
• Mortgage: $320,000
• Monthly rent: $2,800
• Vacancy allowance: 5%
• Annual property tax: $3,500
• Annual insurance: $1,500
• Maintenance allowance: 5% of rent

At first glance, $2,800 of monthly rent might look excellent compared with the mortgage payment. But once vacancy, taxes, insurance, maintenance and other expenses are included, the actual monthly profit can be significantly lower. That is exactly why a rental cash flow calculator is useful before making an offer.

Positive vs. Negative Rental Property Cash Flow

Positive cash flow means the estimated rental income is greater than the operating expenses and mortgage payment. If the calculator shows $350 of monthly cash flow, the property is estimated to produce $4,200 per year before income taxes and unexpected costs not entered into the calculator.

Negative cash flow means the estimated expenses and mortgage are higher than the property’s income. A result of -$300 per month means the owner would need to contribute approximately $3,600 per year to cover the difference if all of the assumptions are accurate.

Negative cash flow does not automatically mean an investment will lose money overall. Property appreciation, mortgage principal repayment and future rent increases can affect the long-term result. However, negative cash flow means you should be comfortable funding the monthly shortfall.

Expenses Rental Property Investors Sometimes Forget

It is easy to underestimate expenses when looking at a property listing. The mortgage and property taxes are obvious, but rental properties can have many additional costs.

• Vacancy between tenants
• Appliance replacement
• Roof repairs
• Furnace and air conditioning repairs
• Plumbing repairs
• Painting between tenants
• Property management fees
• Condo or HOA fees
• Landlord-paid utilities
• Snow removal and lawn maintenance
• Legal and accounting costs
• Advertising and tenant placement costs
• Insurance deductibles
• Major capital expenditures

It is better to test a property with conservative assumptions than to make every number look perfect just to convince yourself that the deal works.

How Much Monthly Cash Flow Is Good for a Rental Property?

There is no single monthly cash flow amount that makes every rental property a good investment. Making $300 per month on a $150,000 property is very different from making $300 per month on a $900,000 property.

This is why our calculator shows the actual cash flow alongside the cap rate and cash-on-cash return. The percentages help put the monthly profit into context based on the price of the property and the amount of money you invested.

FAQ: Rental Property Cash Flow Calculator

How do you calculate cash flow on a rental property?

Rental property cash flow can be estimated by subtracting operating expenses and mortgage payments from effective rental income. Our calculator automatically includes the vacancy allowance, taxes, insurance, maintenance, management fees and other expenses entered by the user.

What does $500 a month cash flow mean?

A rental property producing $500 in monthly cash flow generates approximately $6,000 per year after the expenses and mortgage costs included in the calculation. Unexpected repairs, taxes on rental income and other costs can still affect the actual profit.

Is $200 a month positive cash flow good?

Positive $200 monthly cash flow is better than losing $200 per month, but whether it is a good return depends on the property price, cash invested, risk, expected repairs and other investment opportunities. Use the cash-on-cash return and cap rate results for additional context.

What is the 1% rule for rental properties?

The 1% rule is a quick screening method where investors compare monthly rent with approximately 1% of the property’s purchase price. For example, 1% of a $300,000 property is $3,000 per month. It is only a rough screening rule and does not account for mortgage rates, taxes, insurance, vacancy or repairs, so a full cash flow calculation is much more useful.

What is the 50% rule in rental property investing?

The 50% rule is a rough estimate some investors use by assuming operating expenses could consume approximately half of gross rental income before mortgage payments. Actual expenses can be much higher or lower depending on the property. Our calculator allows you to enter individual expenses rather than relying on a single assumption.

Does NOI include the mortgage payment?

No. Net operating income generally measures property income after operating expenses but before mortgage principal and interest. Our calculator therefore subtracts the mortgage after calculating NOI when determining actual estimated cash flow.

Does cap rate include mortgage payments?

No. Cap rate compares net operating income with property value or purchase price and does not depend on the investor’s mortgage financing. Two investors could buy the same property using different down payments and still calculate the same property cap rate.

What is a good cap rate for rental property?

There is no universal cap rate that is good everywhere. Cap rates vary by location, property type, market conditions, condition and risk. A lower cap rate property in a highly desirable neighborhood could still be attractive, while a very high cap rate could indicate greater risk.

What is cash-on-cash return?

Cash-on-cash return compares annual cash flow with the amount of cash the investor has put into the property. Our calculator includes the down payment, closing costs and initial renovations in the total cash invested.

What is a good cash-on-cash return?

A good cash-on-cash return depends on the investor’s goals, financing, risk tolerance and available alternatives. Instead of relying on one target percentage, compare multiple properties using the same assumptions to see which property produces more cash flow for the amount of money invested.

How much should I budget for vacancy?

The appropriate vacancy allowance depends on the local rental market and property type. You can change the vacancy percentage in the calculator to see how different assumptions affect cash flow. Testing 0%, 5% and 10% vacancy can show how sensitive a deal is to an empty unit.

How much should I budget for rental property repairs?

Repair and maintenance costs vary significantly by the age, size and condition of a property. Our calculator lets you reserve a percentage of monthly rent for repairs. Older properties or properties with aging furnaces, roofs, appliances and plumbing may require a larger allowance.

Should I include property management fees?

If you plan to hire a property manager, include the expected management fee when comparing the investment. Even if you plan to manage the property yourself today, you can enter a management percentage to see whether the property would still work financially if you decide to hire someone later.

How do I calculate break-even rent?

Break-even rent is the approximate rent needed for income to equal the property’s mortgage payment and estimated expenses. Our calculator also adjusts the break-even result for the vacancy, maintenance and management percentages you enter.

Can a rental property have positive cash flow but a low return?

Yes. A property might produce positive monthly cash flow but require a very large down payment. This can result in a relatively low cash-on-cash return because a large amount of cash is invested to produce that monthly profit.

Can a higher down payment improve rental cash flow?

Usually. A larger down payment reduces the mortgage balance and therefore normally reduces the monthly mortgage payment. This can improve cash flow, although it also increases your cash invested and may change the cash-on-cash return.

Does this calculator include property appreciation?

No. This calculator focuses primarily on rental property operating performance and cash flow. Future property appreciation is uncertain and does not provide cash to pay today’s mortgage and expenses. To model appreciation and long-term investment growth, use our Investment Calculator.

Does this rental calculator include income taxes?

No. Income tax treatment varies by country, jurisdiction, ownership structure, deductible expenses and the investor’s individual tax situation. The calculator estimates property cash flow before personal income taxes.

Can I use this calculator for a condo?

Yes. Enter the condo purchase price, financing, rent and other expenses, then include the monthly condo or HOA fee. This makes it easy to see how condominium fees affect monthly cash flow.

Can I use this calculator for a duplex or multi-family property?

Yes. Add the expected monthly rent from all units together and enter the property’s combined expenses. For example, if a duplex has two units renting for $1,600 each, enter $3,200 as the monthly rent.

Can I calculate an all-cash rental property?

Yes. Enter the full purchase price as the down payment. The resulting loan amount and mortgage payment will be zero, allowing you to estimate cash flow and cap rate without financing.

Why Use Our Rental Property Calculator?

It is easy to look at a rental listing and do quick math in your head: “$2,500 rent minus a $1,900 mortgage means I make $600 a month.” Unfortunately, that calculation ignores almost everything else that comes with owning the property.

You still have property taxes, insurance, vacancies, repairs and possibly condo fees, utilities or property management. A property that appears to make $600 per month could actually produce very little cash flow once all of those expenses are included.

Our goal with this calculator is to put the important numbers in one place. You can also change one number at a time to test different scenarios. Increase the rent by $100, try a larger down payment, increase the mortgage rate or assume a higher vacancy rate and see immediately how the investment changes.

Final Thoughts

A rental property should be analyzed as a business rather than simply looking at how much rent a tenant will pay. The purchase price, mortgage, vacancy, property taxes, insurance, repairs, management and other expenses all affect how much money actually ends up in your pocket.

Use our Rental Property Cash Flow Calculator before making an offer, then try the calculation again with more conservative numbers. If a property still produces acceptable cash flow when you increase expenses or lower the expected rent, you have a much better understanding of how the investment could perform. You can also use our Mortgage Calculator to compare financing or our Investment Calculator to compare real estate with other long-term investment scenarios.