Rental Property Cash Flow Calculator
Will a rental pay for itself each month? Enter rent, the allowances you make for vacancy, management and repairs, yearly tax and insurance, and your loan to see what is left in your pocket.
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Formula
Rent collected = rent × (1 − vacancy ÷ 100)Operating costs = collected × management % + collected × repairs % + tax ÷ 12 + insurance ÷ 12Mortgage = standard fixed-rate payment on the loan (0 if no loan)Monthly cash flow = rent collected − operating costs − mortgageYearly cash flow = monthly cash flow × 12
Worked example
Rent 2,500, vacancy 5%, management 8%, repairs 5%, tax 3,600 and insurance 1,200 a year, loan 240,000 at 6.5% over 30 years.
- Rent collected: 2,500 × 0.95 = 2,375.
- Management 190 + repairs 118.75 + tax 300 + insurance 100 = 708.75 operating costs.
- Mortgage payment: 1,516.96.
- Monthly cash flow: 2,375 − 708.75 − 1,516.96 = 149.29; yearly 1,791.48.
Utilities, income tax, capital expenses and appreciation are not included.
When to use it
Use this page to see whether a specific rental is cash positive each month with your loan. Use the cap rate calculator to compare buildings without a mortgage, and the cash on cash return calculator to turn the yearly cash flow into a return on the cash you invested.
Second example
The same property with rent 2,500 but vacancy raised to 10%: collected rent 2,250, operating costs 692.50, mortgage 1,516.96, so monthly cash flow is 40.54 and yearly 486.48.
Common mistakes
- Using a zero vacancy or repairs allowance because the building is new.
- Forgetting capital expenses such as a roof or boiler; keep a reserve.
- Entering tax or insurance monthly in a yearly field.
- Treating positive cash flow as profit when depreciation, tax and your time are not counted.
Frequently asked questions
How is rental cash flow calculated?
Start with the rent you actually collect after vacancy, subtract management, repairs, property tax and insurance, then subtract the mortgage payment. With 2,500 rent and 5% vacancy you collect 2,375 a month.
Are management and repairs a percentage of rent?
Here both are percentages of the rent collected after vacancy. On 2,375 collected, an 8% management fee is 190 and 5% for repairs is 118.75. Use your own figures; typical allowances vary by property age and location.
What does negative cash flow mean?
Costs and the mortgage are higher than the rent you collect, so you pay the difference out of pocket each month. At 2,000 rent with the same costs the result is about −263.96 a month, or −3,167.52 a year.
What if I own the property without a loan?
Set the loan amount to 0. The mortgage payment becomes 0 and cash flow is collected rent minus operating costs: 2,375 − 708.75 = 1,666.25 a month for the example.
How much rent do I need to break even?
Divide the fixed costs by the share of rent you keep. With 300 tax, 100 insurance and a 1,516.96 mortgage, that is 1,916.96, and you keep 0.95 × (1 - 0.08 - 0.05) = 82.65% of rent, so break-even rent is 1,916.96 ÷ 0.8265 = 2,319.4 a month.
What is the formula for rental cash flow in Excel?
Use =rent*(1-vacancy)*(1-management-repairs)-tax/12-insurance/12+PMT(rate/12,years*12,loan). PMT returns a negative number, so adding it subtracts the mortgage. The example gives 149.29 a month.
How much does vacancy matter?
Doubling the vacancy allowance from 5% to 10% on the default property cuts monthly cash flow from 149.29 to 40.54. Thin margins are very sensitive to empty months and repairs, so test a higher allowance before buying.