Rental Property Cash Flow Calculator
Use this calculator to determine the potential monthly and annual cash flow of a rental property investment. Accurate cash flow analysis is critical for evaluating the profitability of real estate investments.
Income
Recurring Monthly Expenses
Annual Expenses (Prorated Monthly)
Understanding Real Estate Cash Flow
Cash flow is the net amount of cash moving into and out of a business or investment. In real estate, positive cash flow occurs when a property's income (primarily rent) exceeds all property-related expenses, including the mortgage, taxes, insurance, and maintenance reserves.
Why Vacancy Rate Matters: No property is occupied 100% of the time. You must account for vacancy loss—periods where the property sits empty between tenants. A standard vacancy rate estimate is often between 5% and 8%, depending on the local market.
Accounting for Reserves: Many new investors calculate cash flow based only on fixed costs like the mortgage. However, successful investors always budget for variable costs. Setting aside money monthly for repairs (e.g., a leaky faucet) and capital expenditures (CapEx, like replacing a roof every 20 years) is crucial for long-term profitability and avoiding negative cash flow surprises.
Example Calculation
Let's assume you buy a single-family home. You rent it for $1,600/month. You estimate a 5% vacancy rate.
- Your effective gross income is $1,600 – ($1,600 * 0.05) = $1,520.
Your monthly expenses are: $850 mortgage P&I, $150 taxes (prorated), $75 insurance (prorated), and you set aside $150 for maintenance reserves.
- Total Monthly Expenses: $850 + $150 + $75 + $150 = $1,225.
Your estimated monthly cash flow would be $1,520 (Income) – $1,225 (Expenses) = $295 per month, or $3,540 annually.