💵 Rental Cash Flow Calculator
Rent minus everything. Enter rent and all carrying costs to see whether a rental truly puts money in your pocket each month.
How Rental Cash Flow Works
Cash flow is the landlord's bottom line: rent collected minus every cost of owning and operating the property. Positive cash flow means the property pays you; negative means you feed it.
The Formula
The reserves matter most. Budget 5% vacancy (about two weeks empty per year), 5–10% maintenance (older homes need more), and 8–10% management even if you self-manage today — your time has value, and someday you may hire out. Investors often target at least $200–$300/month positive cash flow per door after all reserves.
Worked Example
$2,200 rent with $1,350 P&I, $250 tax, $120 insurance, 5% vacancy ($110), 5% maintenance ($110), 8% management ($176), and $100 other = $2,216 in monthly costs. Cash flow = −$16/month — this property essentially breaks even and would bleed cash the first time the furnace dies. Raising rent just $200 flips it to a healthy +$184/month.
Rules of Thumb vs. Real Underwriting
Quick screens: the 1% rule (monthly rent ≥ 1% of purchase price) and the 50% rule (operating expenses ≈ 50% of rent, before debt service) — useful for rejecting bad deals in seconds, not for buying. Real underwriting reserves by component: roof ($5,000–$15,000 every 20–30 years), HVAC ($5,000–$10,000 every 15 years), water heaters, appliances — amortize each into monthly capex. Vacancy assumptions should reflect asset class: 3–5% for Class A, 8–10%+ for Class C. The silent killer is rent growth vs. expense growth: taxes and insurance often rise faster than rents, compressing cash flow over time. Finally, cash flow is only one return leg — add principal paydown, appreciation, and tax benefits (depreciation) for total return, but never let projected appreciation justify negative cash flow.
Screening shortcut: if a deal fails the 1% rent-to-price test and the 50% expense rule, walk away in under a minute. If it passes both, graduate to full underwriting with actual tax records, insurance quotes, and contractor bids — rules of thumb open the funnel, verified numbers close the deal.
Frequently Asked Questions (FAQs)
What is good cash flow for a rental?
Many investors want $200–$300+ per month per unit after all reserves, or a cash-on-cash return above 8–12%. In expensive markets investors sometimes accept thinner cash flow for appreciation — know which game you are playing.
Should I include principal paydown as profit?
For cash flow, no — only actual cash in minus cash out. But remember part of your P&I builds equity (amortization benefit), which is a real return on top of cash flow.
What vacancy rate should I assume?
5% (about 18 days/year) is standard for stable markets; use 8–10% for rougher areas or single-family homes where one vacancy means 100% vacancy.
Does cash flow include appreciation?
No. Cash flow is operational only. Total return = cash flow + principal paydown + appreciation + tax benefits. Appreciation is the least certain of the four.
How do HOA fees affect the analysis?
They are a straight reduction of cash flow and they rise over time — $300/month HOA on a $2,000 rent wipes out most profit. Always include them in "other" costs.
Last updated: September 2026
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Last updated: September 2026