Quick answer
A rental cash flow calculator subtracts every monthly cost — mortgage, tax, insurance, maintenance, management — from the rent. A $325,000 property renting for $2,950 a month with 25% down at 7% produces about $247 a month of cash flow after all expenses: positive but thin, and typical when rates are high. The calculator exists to find that out before you buy, not after.
How the Rental Cash Flow works, step by step
Enter the price, down payment, loan rate and term, the expected rent, and each operating expense: property tax, insurance, HOA, a maintenance reserve and a management fee, both commonly set as percentages of rent. The calculator computes the mortgage payment, totals the expenses and shows the monthly and annual cash flow. Vacancy is a line item too, at 5% of rent by default.
It also returns the two companion measures. Cap rate (NOI ÷ price) judges the building unleveraged — 6.90% here, on NOI of $22,428. Cash-on-cash return (annual cash flow ÷ total cash invested, including closing costs) judges your actual deal: $2,968 a year on $87,750 invested is 3.38%. At high interest rates the two diverge sharply, and cash-on-cash is the one that pays your bills.
Stress the inputs before believing the output. The $247 monthly margin absorbs a 5% vacancy allowance already, but a rent drop of 5% would remove about $148 a month, and a single $8,000 roof erases more than two years of this property's cash flow. A deal that only works with full occupancy and zero repairs is not a deal; it is a hope. The vacancy, maintenance and management sliders are there to be moved.
The 1% rule is a quick screen for the same question: monthly rent should be at least 1% of the total purchase price for a property to have a chance of cash-flowing. This property rents at 0.91% of price ($2,950 ÷ $325,000) and indeed produces only thin cash flow. In high-price coastal markets few properties pass 0.7%; in parts of the Midwest 1% or better is achievable.
Watch the leverage arithmetic. The mortgage rate is 7% and the cap rate is 6.90% — borrowing costs slightly more than the property yields, so leverage drags rather than lifts the return, and the 3.38% cash-on-cash return sits below the 6.90% cap rate. Cash flow then depends on rent growth and appreciation rather than current income, which is a speculation the calculator makes visible rather than hiding.
The formula
Monthly cash flow = Rent − mortgage payment (P&I) − tax − insurance − HOA − maintenance reserve − management fee − vacancy reserve − other costs. NOI = annual rent − annual operating expenses (excluding the mortgage). Cash-on-cash = annual cash flow ÷ (down payment + closing costs).
Worked example — try it on the calculator above
Worked example: $325,000 purchase, $2,950 monthly rent
25% down is $81,250; the $243,750 loan at 7% over 30 years costs $1,621.67 a month. Expenses: tax $325, insurance $125, vacancy at 5% of rent $147.50, maintenance at 5% $147.50, management at 8% $236, other costs $100 — total $1,081. Cash flow = $2,950 − $1,621.67 − $1,081 = $247.33 a month, $2,968 a year. NOI is $22,428 (rent minus operating expenses), a cap rate of 6.90%. Cash invested is $87,750 including 2% closing costs, so cash-on-cash return is about 3.38% — the honest summary of leverage at a 7% mortgage rate.
Frequently Asked Questions
What is the 1% rule in rental property?
A screening heuristic: monthly rent should be at least 1% of the purchase price for a property to have a chance of cash-flowing. The example property rents at 0.91% of price ($2,950 ÷ $325,000) and produces only thin cash flow. In high-price coastal markets few properties pass 0.7%; in parts of the Midwest 1% or better is achievable. It screens deals in seconds and replaces none of the detailed maths.
How much should I reserve for maintenance and capital expenses?
A common provision is 5% of rent for routine maintenance plus a separate capital reserve for big items — roof, HVAC, water heater — based on their remaining life. Older properties need more. Properties shown with zero maintenance are being marketed, not analysed; a single $8,000 roof erases over two years of the example's cash flow.
Should I include vacancy in cash flow?
Yes — budget 5% to 8% of rent even in a strong market. A property that is empty for one month in twelve, plus turnover costs, roughly matches an 8% to 10% economic vacancy. This calculator includes a 5% vacancy line by default ($147.50 a month here); raising it to 8% removes a further $88.50 a month and cuts cash flow to about $159.
Why is cash flow low when the cap rate looks decent?
Because the mortgage rate (7%) exceeds the cap rate (6.90%). When borrowing costs more than the property yields, leverage works against you — negative leverage. Cash flow then depends on rent growth and appreciation rather than current income, which is a speculation the calculator makes visible rather than hiding.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.