Calculator Panel
Calculation Ready
Enter your values above and click Calculate.
What This Calculator Does
This calculator isolates operating cash flows, helping you determine if a rental property will generate positive cash flow or lose money each month.
How to Use This Calculator
Enter your monthly rent, vacancy rate, mortgage payment, monthly property tax, insurance, HOA, property management rate, and maintenance reserve, then click Calculate.
How the Calculation Works
The underlying math engine processes your inputs using exact formulas. This systematic approach ensures professional, institutional-grade calculation precision:
Mathematical Formula
Formula Legend:
- · Vacancy = Expected vacancy rate allowance.
- · Taxes & Insurance = Monthly property tax and insurance payments.
- · Management & Maintenance Rates = Percent of rent set aside for operations and capital reserves.
Practical Example
Suppose your rental property rents for $2,500/month. You have a 5% vacancy rate, an $1,100 monthly mortgage, $250 property taxes, $100 insurance, $50 HOA fees, an 8% property management rate, and a 10% maintenance reserve:
Step-by-Step Mathematical Walkthrough:
- 1 Calculate gross monthly rent after vacancy: $2,500 * (1 - 0.05) = $2,375.
- 2 Calculate property management fee: $2,500 * 8% = $200.
- 3 Calculate maintenance & capex reserve: $2,500 * 10% = $250.
- 4 Subtract all monthly expenses: $2,375 - $1,100 (mortgage) - $250 (taxes) - $100 (insurance) - $50 (HOA) - $200 (management) - $250 (maintenance) = $425 monthly net cash flow.
- 5 Your annual net cash flow is $425 * 12 = $5,100.
Important Assumptions & Notes
- Property management and maintenance rates are calculated as a percentage of gross monthly rent.
- The vacancy deduction is subtracted directly from gross monthly rent.
Common Mistakes or Considerations
- Ignoring capital expenditures (Capex) like roofing or HVAC replacement, which eventually occur and can instantly wipe out multiple years of cash flow if not budgeted monthly.
Frequently Asked Questions
What is Capex in real estate?
Capital Expenditures (Capex) are major, long-term structural replacements like a new roof, water heater, plumbing, or HVAC system. Unlike standard maintenance, these are major expenses that should be funded by setting aside 5% to 10% of monthly rent in a reserve account.
Why should I include property management if I manage it myself?
You should value your time as an expense. If you manage the property yourself, factoring in an 8% or 10% expense ensures the property is still profitable if you decide to hire a professional manager later.