Rental Property Cash Flow Calculator
Will the rent cover the mortgage and every other bill, with something left over? Enter the price, the loan and the rent to see a rental's monthly cash flow, cap rate, cash-on-cash return and the rent it needs to break even.
Your numbers
A first-year, pre-tax planning estimate for a fixed-rate loan. It doesn't include appreciation, rent increases, PMI, capital expenditures you schedule separately, or taxes. Not financial advice.
How rental cash flow works
- Cash flow is what's left after every bill, mortgage included. Start from the rent, take off vacancy, then the operating costs (property tax, insurance, HOA, repairs and maintenance, management, utilities you pay), then the mortgage payments.
- Net operating income (NOI) leaves the mortgage out. It's collected rent minus operating costs, so it describes the property, not the loan. Lenders and buyers compare properties by it.
- Cap rate = NOI ÷ price. It's the return you'd earn paying all cash. In the example it's 6.93%.
- Cash-on-cash return = yearly cash flow ÷ the cash you put in (down payment, closing costs and repairs). It's the return on your own money, after the mortgage: 2.42% in the example.
- DSCR = NOI ÷ mortgage payments. Many investment-property lenders want 1.2 or more; under 1.0, the rent doesn't cover the loan.
- The 1% rule is a quick screen, not a verdict: monthly rent of at least 1% of the price. Taxes, insurance and rates vary so much by area that the full calculation is what counts.
- Budget for vacancy and maintenance even if the house is full and new. 5% to 8% vacancy and 5% to 10% of rent for repairs and replacements (roof, water heater, flooring) are common planning figures.
- Taxes are a separate step. On Schedule E you deduct mortgage interest (not principal) and depreciation, so a rental with positive cash flow often shows a tax loss. Principal paid isn't an expense: it builds your equity ($2,031.55 in the first year of the example).
Worked example
Example. A $250,000 single-family rental, bought with 20% down ($50,000) and a 30-year loan at 7%, with $6,000 of closing costs. It rents for $2,200 a month. Property tax is $3,000 a year and insurance $1,500; the plan allows 5% vacancy, 5% of collected rent for maintenance and 8% for a property manager.
| Year one | Amount |
|---|---|
| Rent, 12 months | $26,400.00 |
| Vacancy | -$1,320.00 |
| Rent collected | $25,080.00 |
| Property tax and insurance | -$4,500.00 |
| Maintenance | -$1,254.00 |
| Property management | -$2,006.40 |
| Net operating income (NOI) | $17,319.60 |
| Mortgage, 12 × $1,330.60 | -$15,967.20 |
| Cash flow for the year | $1,352.40 |
It earns $112.70 a month after every bill, a 2.42% cash-on-cash return on $56,000. The rent could fall to $2,063.64 before the property stops paying for itself. Principal paid in the first year, $2,031.55, adds to equity on top of the cash flow.
Frequently asked questions
What is a good cash flow for a rental property?
There's no single number: it depends on the price, the area and your goals. Many investors look for at least $100 to $200 a month per door after every expense, including vacancy and maintenance reserves. The example makes $112.70.
What is a good cap rate?
Cap rates of about 5% to 10% are typical for residential rentals. Higher cap rates usually come with more risk or more work (older buildings, weaker areas); lower ones with more expensive, stable areas. Compare against similar properties near yours.
What is a good cash-on-cash return?
Many buy-and-hold investors aim for 8% to 12%. It moves a lot with the interest rate and the down payment: more down means less mortgage but more cash in, so the percentage can fall even as the monthly cash flow rises.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores the loan: NOI ÷ price. Cash-on-cash includes it: cash flow after the mortgage ÷ the cash you put in. With a mortgage at a higher rate than the cap rate, cash-on-cash ends up lower than the cap rate.
Does the mortgage payment include taxes and insurance?
Not here. The payment shown is principal and interest; property tax and insurance are entered separately, whether or not your lender collects them in escrow.
What is the break-even rent?
The monthly rent at which cash flow is exactly zero, with your vacancy, maintenance and management percentages applied to it. In the example it's $2,063.64.
Is this tax advice?
No. It's a pre-tax planning estimate for the first year. Depreciation, the interest deduction and your tax bracket change what you keep after tax: see the rental property depreciation calculator for that part.