Rental Property Cash Flow Calculator
- Property tax
- Insurance
- Management
- Repairs reserve
- Mortgage
- Cash flow
Cash flow is thin: rent covers the mortgage only 1.1× after costs. One big repair or a two-month vacancy would turn it negative.
How the rental property cash flow calculation works
Take off vacancy
Rent you won't collect while the unit is empty or rent goes unpaid. 5% of $2,400 is $120, leaving $2,280.
Subtract operating costs
Tax $300, insurance $120, management 8% of collected rent ($182.40) and a 5% repairs reserve ($120): $722.40 in all.
That leaves net operating income
$2,280 − $722.40 = $1,557.60 a month, or $18,691.20 a year. Divided by the $300,000 price, the cap rate is 6.23%.
Subtract the mortgage
After a $1,422 principal-and-interest payment, cash flow is $135.60 a month: $1,627.20 a year on $75,000 invested, a 2.17% cash-on-cash return.
Worked example. A $300,000 rental renting for $2,400 a month, with 5% vacancy, $300 tax, $120 insurance, 8% management and a 5% repairs reserve, has $1,557.60 of monthly NOI (6.23% cap rate). After a $1,422 mortgage payment it cash flows $135.60 a month, a 2.17% cash-on-cash return on $75,000 invested.
Rental Property Cash Flow FAQ
How do you calculate cash flow on a rental property?
Rent collected minus operating costs (tax, insurance, management, repairs, HOA) minus the mortgage payment. Use collected rent after vacancy, not the full asking rent.
What is a good cash flow on a rental property?
Any positive figure after a realistic repairs reserve and vacancy allowance is a start. A cushion matters too: the debt coverage (DSCR) figure shows how many times NOI covers the mortgage. In the example NOI covers the mortgage only 1.1×, so one repair bill over $1,627.20 would wipe out a year of cash flow. Lenders set their own DSCR minimums, so ask yours.
What is cash-on-cash return?
Cash-on-cash return is the yearly cash flow after the mortgage divided by the cash you put in: down payment, closing costs and upfront repairs. It shows what your own money earns each year, before equity build-up, appreciation and income tax.
How do you calculate cash-on-cash return?
Multiply monthly cash flow by 12 and divide by the cash invested. In the example, $135.60 × 12 = $1,627.20, and $1,627.20 ÷ $75,000 = 2.17%.
What is a good cash-on-cash return?
There is no official benchmark; investors set their own target. Compare it with what the same cash would earn elsewhere at a similar risk, and remember it leaves out equity build-up and appreciation. Re-run it with a higher vacancy and repairs reserve: a return that only works on optimistic numbers is not a good one.
What is the difference between cap rate and cash-on-cash return?
Cap rate is annual NOI ÷ purchase price and ignores financing. Cash-on-cash return is annual cash flow after the mortgage ÷ the cash you put in, so it reflects your loan.
Should principal be counted as an expense?
For cash flow, yes, because the money leaves your account every month. Principal does build equity, so total return is higher than cash flow alone shows.
How much should I budget for repairs and maintenance?
There is no standard figure. The calculator uses 5% of gross rent as a starting point; base yours on the age and condition of the roof, HVAC, appliances and plumbing, and use a higher percentage for older buildings.
Does rental cash flow include depreciation and income tax?
No. This is pre-tax cash flow. Depreciation is a tax deduction that recovers the cost of the property over several years (IRS Publication 527); no money leaves your account, so it does not reduce monthly cash flow, but it can lower the tax you owe on the rental income.
Sources: IRS Publication 527, Residential Rental Property: rental expenses and depreciation