Rental Property Cash Flow Calculator

Understanding Rental Property Cash Flow

Cash flow is the lifeblood of rental property investing. A property that generates positive cash flow covers all its own expenses and puts money in your pocket each month. A property with negative cash flow requires you to subsidize it from other income, draining your savings and limiting your ability to grow.

How to Use This Calculator

The inputs come in three groups. Income is monthly rent plus anything else the property earns, like laundry, storage, or pet rent. If you are not sure what a unit should rent for, start with the rental income calculator. Purchase and financing set your mortgage payment, assuming a 30 year fixed loan. Operating expenses are the recurring monthly costs of keeping the property running.

You get four outputs: monthly cash flow, annual cash flow, cash-on-cash return, and a 1% rule check. The breakdown bar shows where every dollar of rent goes, so you can see at a glance whether the mortgage or the operating costs are eating the deal.

How to Calculate Cash Flow on a Rental Property

The calculator runs these five steps for you, but knowing them makes the output easier to trust.

Step 1: Start with gross income

Add up monthly rent plus any other income the property produces. Use real market rent from comparable listings, not the seller's pro forma.

Step 2: Subtract vacancy

No property stays full forever. Knock 5-8% off gross income for the weeks a unit sits empty between tenants. The result is your effective gross income (EGI).

Step 3: Subtract operating expenses to get NOI

Deduct property taxes, insurance, maintenance, management, HOA fees, and any utilities you cover. What remains is net operating income (NOI). NOI deliberately excludes the mortgage, which is why it is the number behind cap rate. To value a property by its NOI, use the cap rate calculator. Budget maintenance honestly: water heaters fail, roofs leak, and the HVAC will eventually need replacing, so include a capital expenditure reserve, not just routine repairs.

Step 4: Subtract debt service

Take out the monthly principal and interest payment. What is left is cash flow. To see how the payment itself breaks down, or test a 15 year loan, use the rental property mortgage calculator.

Step 5: Stress-test the result

A deal that only works when everything goes right is not a deal. Re-run the numbers with two months of vacancy, a $3,000 repair, or an interest rate one point higher. If it still holds up, you have real cushion.

A Worked Example: $300,000 Single Family Rental

Say you buy at $300,000 with 20% down. That leaves a $240,000 loan at 7% over 30 years, which costs $1,597 a month in principal and interest. The house rents for $2,200. After a 5% vacancy allowance, effective gross income is $2,090.

Operating expenses run $750 a month: $350 in property taxes, $150 for insurance, and a $250 maintenance budget. That puts NOI at $1,340. Subtract the $1,597 mortgage payment and you are at negative $257 a month, about negative $3,081 a year. On $72,000 invested (down payment plus $12,000 in closing costs and repairs), the cash-on-cash return is negative 4.3%.

This deal fails, and that is exactly why you run the numbers before you write an offer. Rent here is only 0.73% of the purchase price, so the 1% rule flagged it from the start. To break even at these expenses, rent would need to reach about $2,471, or the price and loan would need to come down. Plug in your own numbers above and see which side of the line your deal lands on.

The 1% Rule and the 50% Rule

The 1% rule

A quick screening test: monthly rent should be at least 1% of the purchase price. A $300,000 property should rent for around $3,000 a month. It is not a guarantee, you still need the full analysis, but it is a useful filter when scanning listings.

The 50% rule

Assume operating expenses, not counting the mortgage, will average about half of gross rent over the long run. Take half the rent, subtract the mortgage payment, and if the result is negative the deal probably does not cash flow. It runs high for newer properties and low for older ones with big deferred maintenance, so treat it as a filter, never a substitute for line-item budgeting.

What Is a Good Cash-on-Cash Return?

Cash-on-cash return measures your annual profit relative to the actual cash you invested. If you put $70,000 into a property (down payment + closing costs + repairs) and it generates $6,300 per year in cash flow, your cash-on-cash return is 9%.

A cash-on-cash return of 8-12% is generally considered good for residential rental property. Returns above 12% are excellent but may indicate higher-risk properties or markets. Returns below 5% may not justify the work and risk of being a landlord when you could invest in index funds with less effort.

To break that number apart properly, including the formula, a worked example, and how to solve backward from a target return, use the cash-on-cash return calculator.

Cash Flow Is Not Taxable Income

The number this calculator gives you is pre-tax cash flow, and it usually differs from what you report to the IRS. Depreciation is a deduction you take without spending a dollar, so a property that puts real cash in your pocket can still show a paper loss on your return. Estimate that deduction with the depreciation calculator, then see how the whole picture lands on your Schedule E.

How to Improve Cash Flow on a Property You Own

If a property you already hold is running thin, the levers are on both sides of the ledger. On the income side: bring rent to market at renewal, and add income streams like pet rent, storage, or paid parking. On the expense side: appeal your property tax assessment if comparable sales support it, requote insurance every year, and review what your property manager charges against what you actually use.

Vacancy is the quiet killer. One month empty wipes out more profit than most expense cuts will ever recover, so responsive maintenance and fair renewals that keep good tenants in place are cash flow strategies too. And if rates drop meaningfully below your note, run a refinance scenario through the mortgage calculator. Buying your first property? The first rental property guide walks the whole process end to end.

Frequently Asked Questions