Rental Property Cash Flow Calculator

The mortgage payment uses the standard amortization formula. Operating expenses combine fixed monthly costs with reserves expressed as a percentage of rent. Cash flow is what is left after both.

Cap rate is deliberately unlevered — it divides annual net operating income by the purchase price and ignores the loan entirely, which is what makes it comparable across deals. Cash-on-cash is the levered view: annual cash flow divided by the cash you actually put in.

• Loan amount = purchase price − down payment
• Monthly payment = L × r ÷ (1 − (1 + r)^−n), where r = annual rate ÷ 12 and n = term × 12. At 0% interest the payment is simply L ÷ n.
• Operating expenses (monthly) = tax + insurance + HOA + rent × (vacancy % + maintenance % + management %)
• Monthly cash flow = rent − operating expenses − mortgage payment
• Annual NOI = (rent − operating expenses) × 12
• Cap rate = annual NOI ÷ purchase price × 100
• Cash invested = down payment + closing costs and upfront rehab
• Cash-on-cash = annual cash flow ÷ cash invested × 100

Monthly cash flow is rent minus operating expenses and the mortgage payment. Cap rate is deliberately unlevered so deals compare like for like, and cash-on-cash measures annual cash flow against the cash you actually put in.

Common mistakes and assumptions

• Leaving vacancy, maintenance, and management at zero, which is what makes a bad deal look good.
• Confusing cap rate with cash-on-cash — the first ignores the loan, the second depends on it.
• Omitting closing costs and upfront work from cash invested, which overstates cash-on-cash return.

A $265,000 duplex with $53,000 down and $6,000 of closing costs at 6.75% over 30 years rents for $2,350. Taxes are $310 a month, insurance $145, no HOA, with 6% vacancy, 8% maintenance, and 8% management.

1. 1Loan = $265,000 − $53,000 = $212,000; payment ≈ $1,375.03 per month.
2. 2Reserves = $2,350 × 22% = $517; total operating expenses = $310 + $145 + $517 = $972.
3. 3Monthly cash flow = $2,350 − $972 − $1,375.03 ≈ $2.97 — essentially break-even.
4. 4Annual NOI = ($2,350 − $972) × 12 = $16,536, so the cap rate is $16,536 ÷ $265,000 = 6.24%.
5. 5Cash invested = $53,000 + $6,000 = $59,000, so cash-on-cash is $35.61 ÷ $59,000 = 0.06%.

Does the mortgage payment include taxes and insurance?

No. The payment shown is principal and interest only, because taxes and insurance are entered separately as operating expenses. If your lender escrows them, do not add them twice.

Why is vacancy inside operating expenses?

Treating vacancy as an expense keeps rent at market and makes the cap rate reflect a realistic occupancy. It is equivalent to reducing gross rent, and it makes the assumption visible.

What cap rate should I look for?

Cap rates are local and vary by property class and interest-rate environment, so compare against recent sales of similar properties in the same submarket rather than a national figure.

Does this include closing costs or rehab?

Yes, optionally. Anything you enter in the closing costs and rehab field is added to cash invested for the cash-on-cash return without changing the loan amount. Leave it blank and cash invested is just the down payment — the results card says which applies.

Is PMI included?

No. If your down payment is under 20% and PMI applies, add the monthly premium to the insurance field.