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Cash Flow Calculator

Calculate monthly and annual cash flow from rental property income. Subtract mortgage, taxes, insurance, maintenance, vacancy, and management fees from gross rent to determine net cash flow.

Monthly Income

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Total monthly rental income before any deductions

Monthly Expenses

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Principal and interest only
$
$
$
Budget for ongoing maintenance and repairs

Operating Factors

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Typical range: 5-10% annually
%
Typical range: 8-10% of gross rent (0% if self-managed)

Understanding Cash Flow

What is Cash Flow?

Cash flow is the net amount of money moving into or out of your rental property investment each month. Positive cash flow means the property generates more income than expenses, while negative cash flow means you need to contribute money to cover the shortfall.

Formula: Cash Flow = Effective Rent - (Mortgage + Taxes + Insurance + Maintenance)

Key Components

  • Gross Rent: The total rent collected from tenants before any deductions
  • Vacancy Cost: Lost rent when the property is vacant. Most investors use 5-10% annually, even if the property is currently occupied, to account for future turnover.
  • Management Fee: If using a property manager, they typically charge 8-10% of gross rent. Set to 0% if you manage the property yourself, but consider your time investment.
  • Mortgage Payment: Principal and interest only (P&I). This calculator helps you see how much cash is left after the loan payment.
  • Property Taxes: Annual property taxes divided by 12 for monthly calculation
  • Insurance: Property and liability insurance premiums
  • Maintenance & Repairs: Ongoing maintenance, repairs, and capital expenses. A common rule is 1% of property value annually.

Why Cash Flow Matters

Cash flow determines whether a rental property is self-sustaining or requires you to add money each month. Properties with positive cash flow provide:

  • Monthly income that you can reinvest or use for living expenses
  • A buffer against unexpected expenses or rent increases
  • Financial stability if you lose your primary income source
  • Funds to build reserves for future capital expenditures

However, some investors accept neutral or slightly negative cash flow if the property has strong appreciation potential, is in a high-demand area, or builds significant equity through mortgage paydown.

Important Considerations

  • Vacancy Reserves: Even with a great tenant, budget for future vacancy. A 5% vacancy rate (about 2-3 weeks per year) is conservative.
  • Maintenance Budget: Properties need ongoing maintenance. Budget at least 1% of property value annually, or $100-300/month depending on property age and condition.
  • CapEx Reserves: Beyond routine maintenance, set aside money for major expenses like roof replacement, HVAC systems, and appliances.
  • HOA Fees: If applicable, include HOA fees in your monthly expenses.
  • Utilities: Factor in any utilities you pay (water, trash, lawn care, etc.).
  • Market Trends: Cash flow can change over time with rent increases, property tax changes, and insurance rate adjustments.

Investment Strategy Tips

Different investors have different cash flow targets:

  • Conservative Investors: Target $200-300+ per unit per month in positive cash flow to ensure a comfortable margin of safety
  • Moderate Investors: Accept $100-200 per unit per month, balancing cash flow with appreciation potential
  • Appreciation-Focused: May accept break-even or slight negative cash flow in high-growth markets where property values are increasing rapidly

Remember: Cash flow is only one metric. Also consider appreciation, equity buildup, tax benefits, and your overall investment goals.

Disclaimer: This calculator provides estimates for analysis purposes only and should not be considered financial, investment, or tax advice. Actual cash flow may vary based on market conditions, property performance, tenant quality, and unforeseen expenses. Always conduct thorough due diligence and consult with qualified professionals before making investment decisions.