function calculateRentalCashFlow() {
// Get Input Values
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var down = parseFloat(document.getElementById('downPayment').value) || 0;
var rate = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var taxYearly = parseFloat(document.getElementById('propertyTax').value) || 0;
var insYearly = parseFloat(document.getElementById('homeInsurance').value) || 0;
var hoa = parseFloat(document.getElementById('hoaFees').value) || 0;
var maintPercent = parseFloat(document.getElementById('maintenance').value) || 0;
var vacPercent = parseFloat(document.getElementById('vacancy').value) || 0;
// Mortgage Calculation
var loanAmount = price – down;
var monthlyRate = rate / 100 / 12;
var numberOfPayments = years * 12;
var mortgagePayment = 0;
if (loanAmount > 0 && rate > 0) {
mortgagePayment = loanAmount * monthlyRate * (Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && rate === 0) {
mortgagePayment = loanAmount / numberOfPayments;
}
// Monthly Operating Expenses
var taxMonthly = taxYearly / 12;
var insMonthly = insYearly / 12;
var maintMonthly = rent * (maintPercent / 100);
var vacMonthly = rent * (vacPercent / 100);
var totalOperatingExpenses = taxMonthly + insMonthly + hoa + maintMonthly + vacMonthly;
var totalExpenses = totalOperatingExpenses + mortgagePayment;
// Income Metrics
var grossIncome = rent; // Could add other income here later
var effectiveGrossIncome = grossIncome – vacMonthly;
var noi = effectiveGrossIncome – (totalOperatingExpenses – vacMonthly); // NOI usually excludes debt service
// Correction for NOI standard definition: Income – Operating Expenses (Vacancy is a contra-income or expense)
// Let's stick to standard: Rent – Vacancy – Operating Costs (Tax, Ins, HOA, Maint)
var netOperatingIncome = rent – vacMonthly – taxMonthly – insMonthly – hoa – maintMonthly;
var cashFlow = netOperatingIncome – mortgagePayment;
var annualCashFlow = cashFlow * 12;
var annualNOI = netOperatingIncome * 12;
// Investment Returns
var totalCashInvested = down + closing;
var cashOnCash = 0;
if (totalCashInvested > 0) {
cashOnCash = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// Display Results
document.getElementById('resCashFlow').innerHTML = "$" + cashFlow.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
document.getElementById('resCoC').innerHTML = cashOnCash.toFixed(2) + "%";
document.getElementById('resCapRate').innerHTML = capRate.toFixed(2) + "%";
document.getElementById('resTotalExp').innerHTML = "$" + totalExpenses.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
// Style changes based on performance
var cfElement = document.getElementById('resCashFlow');
if(cashFlow >= 0) {
cfElement.style.color = "#0e6655";
} else {
cfElement.style.color = "#c0392b";
}
// Dynamic Analysis Text
var analysisText = "";
if (cashFlow > 100 && cashOnCash > 8) {
analysisText = "This looks like a solid investment opportunity with positive cash flow and healthy returns.";
} else if (cashFlow > 0) {
analysisText = "The property is cash flow positive, but returns are modest. Consider if appreciation potential justifies the lower yield.";
} else {
analysisText = "Warning: This property has negative cash flow. You will be paying out of pocket monthly to hold this asset.";
}
document.getElementById('resAnalysis').innerHTML = analysisText;
document.getElementById('resultsSection').style.display = "block";
}
Understanding Rental Property Investment Metrics
Investing in real estate is a powerful way to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed, investors must analyze the numbers meticulously. This calculator helps you determine the viability of a potential rental property by breaking down the three most critical metrics: Cash Flow, Cash-on-Cash Return, and Cap Rate.
1. Monthly Cash Flow
Cash flow is the net amount of money moving in or out of your business every month. In rental real estate, it is calculated as:
Cash Flow = Total Rental Income – (Operating Expenses + Debt Service)
Positive cash flow means the property pays for itself and generates profit. Negative cash flow means you are losing money every month just to hold the property. For example, if you collect $2,000 in rent, but your mortgage, taxes, and repairs cost $1,800, your positive cash flow is $200/month.
2. Cash-on-Cash Return (CoC)
While cash flow tells you dollar amounts, Cash-on-Cash return tells you the percentage yield on the actual cash you invested. This is crucial for comparing real estate against other investments like stocks.
If you put down $50,000 to buy a house and it generates $5,000 in net profit per year, your CoC return is 10%. This metric helps you understand how hard your money is working for you.
3. Cap Rate (Capitalization Rate)
Cap Rate measures the property's natural rate of return assuming you bought it with 100% cash (no loan). It is primarily used to compare the profitability of similar properties regardless of financing.
Formula: (Net Operating Income / Purchase Price) × 100
A higher Cap Rate generally implies a better return but may come with higher risk (e.g., a property in a declining neighborhood). Most residential investors aim for Cap Rates between 4% and 10% depending on the market.
Estimating Expenses Accurately
Novice investors often overestimate profit by ignoring hidden costs. This calculator includes inputs for:
Vacancy Rate: Properties won't be rented 365 days a year. A 5-8% vacancy allowance is standard.
Maintenance: Setting aside 5-10% of monthly rent ensures you have funds for broken toilets or roof repairs.
HOA Fees: Homeowners Association fees can severely eat into profits if not accounted for.
How to Use This Calculator
Purchase Details: Enter the price, your down payment, and loan terms. Don't forget closing costs!
Income: Input the expected monthly rent. Check local listings (comps) to be realistic.
Expenses: Fill in taxes, insurance, and estimate maintenance/vacancy percentages.
Analyze: Click "Calculate Returns" to see if the deal makes financial sense.