How to calculate rental property cash flow
Start with expected rent, account for months without a tenant, then subtract recurring costs. Our Rental Property Calculator applies the following formulas to your own assumptions:
- Effective income = monthly rent − (monthly rent × vacancy percentage).
- Operating expenses = annual taxes ÷ 12 + annual insurance ÷ 12 + maintenance (a percentage of rent) + management (a percentage of effective income) + other monthly expenses.
- Monthly NOI = effective income − operating expenses.
- Monthly cash flow = monthly NOI − CapEx reserve (a percentage of rent) − monthly mortgage principal and interest.
- Annual figures = the corresponding monthly figure × 12.
Inputs that change your cash-flow estimate
- Purchase and financing
- Enter purchase price, down-payment percentage, your assumed annual interest rate and loan term. The loan equals price minus down payment; principal and interest use a standard fully amortizing payment. A 100% down payment means no loan payment. At 0% interest, payment is loan amount divided by the number of months.
- Rent and vacancy
- Use monthly rent supported by local comparisons and a vacancy allowance. Vacancy reduces collected income; it is not a second expense to enter elsewhere.
- Operating costs
- Taxes and insurance are annual inputs. Maintenance is a percentage of scheduled rent; management is a percentage of income after vacancy. Other expenses are monthly amounts, such as HOA dues, owner-paid utilities or lawn care. Avoid counting the same cost twice.
- CapEx and upfront cash
- The CapEx reserve allows for replacements such as a roof or HVAC system and reduces cash flow, not NOI, in this model. Closing costs, upfront renovation and initial reserves increase cash invested for cash-on-cash return; they are not recurring monthly expenses.
- Optional target monthly cash flow
- The calculator reverses the payment formula to estimate a maximum purchase price for your goal, keeping rent, expenses, down-payment percentage, rate and term fixed. Taxes, insurance and closing costs do not automatically increase with price. With an all-cash purchase, price does not change monthly cash flow in this model, so it cannot establish a unique maximum price.
Hypothetical example
From rental income to cash left over
Using the existing calculator example: a $250,000 purchase, 25% down, a hypothetical 7% rate over 30 years, $6,000 closing costs and $2,200 monthly rent. Annual taxes are $3,000 and insurance is $1,500. Vacancy, maintenance and CapEx each use 5% of rent; management uses 8% of collected income. Other expenses, renovation and initial reserves are $0.
- Monthly rent
- $2,200
- Vacancy allowance
- $110
- Effective monthly income
- $2,090
- Property taxes
- $250
- Insurance
- $125
- Maintenance / repairs
- $110
- Management
- $167
- Other monthly expenses
- $0
- Total operating expenses (excluding vacancy)
- $652
- Monthly NOI
- $1,438
- CapEx reserve
- $110
- Mortgage principal & interest
- $1,247
- Monthly cash flow
- $80
- Annual NOI
- $17,254
- Annual cash flow
- $964
Here, monthly NOI of $1,438 falls to $80 in cash flow after the mortgage payment and CapEx reserve. That leaves a narrow cushion: an unexpected repair or additional vacancy could exceed it. Compare both outputs rather than judging a property by rent or NOI alone.
These are made-up inputs already used in our rental calculator, not a rate quote or terms offered by All Ways Capital LLC. Results are calculated with the same formulas as the interactive calculator and displayed rounded to whole dollars; calculations retain full precision.
What the outputs tell you—and what they leave out
Positive cash flow means modeled income covers the costs entered, including your CapEx allowance and loan payment. Negative cash flow means those assumptions leave a monthly shortfall. Neither result guarantees the property's future performance.
NOI measures operating income before financing and the CapEx reserve in this calculator. Cap rate divides annual NOI by purchase price, while cash-on-cash return divides annual cash flow by your upfront cash invested. Changing your financing can change cash flow without changing NOI.
- Rent and costs stay constant; annual totals do not model rent growth, changing insurance, seasonal vacancies or the timing of a major repair.
- Income taxes, depreciation, appreciation and mortgage insurance are excluded. Interest-only, balloon and adjustable-rate payment schedules are not modeled.
- The rental calculator's DSCR is annual NOI ÷ annual principal and interest, with N/A for no loan. Lenders may use different qualifying income, expenses and payment definitions. The DSCR Calculator offers a separate rent-to-PITIA estimate.
- Results are educational estimates, not financial, tax or lending advice or an approval decision. Get REI Loan is operated by Seal TC, LLC, an independent referral and education site—not a lender or broker.