Cash Flow Calculator
Enter your monthly rental income, vacancy rate, operating expenses, and mortgage payment to calculate your monthly and annual cash flow. This is the single most important metric for any landlord — it tells you whether the property puts money in your pocket or takes it out.
Results are estimates for informational purposes only. Not financial advice. Full disclaimer.
What is Cash Flow?
Cash flow is the money left over after all expenses are paid. For a rental property, it is calculated by taking the rental income, subtracting a vacancy allowance, then subtracting operating expenses and mortgage payments. The result is the actual cash you receive each month from owning the property. Positive cash flow means the property pays for itself and generates income. Negative cash flow means you are paying out of pocket to own the property — a situation some investors accept in appreciation-heavy markets but one that creates financial risk if the market turns. Effective gross income adjusts the gross rent by the vacancy rate. Even the best properties experience some vacancy — during tenant turnover, marketing periods, or seasonal gaps. A 5% vacancy rate on a $2,000/month property means you should expect to collect about $1,900/month on average over time, not the full $2,000. Operating expenses include property taxes, insurance, maintenance, property management fees, HOA dues, and any utilities you pay as the landlord. These are recurring costs of ownership that exist whether or not you have a mortgage. The mortgage payment (principal and interest) is listed separately because it is a financing cost, not an operating cost — and because many investors analyze properties both with and without financing. Many experienced investors follow the "$200 per door" rule as a minimum threshold: each rental unit should generate at least $200/month in cash flow after all expenses and debt service. Properties below this threshold may not provide enough cushion for unexpected repairs or extended vacancies. This rule of thumb varies by market — higher-cost markets often have thinner cash flow margins.
How to Calculate
- Enter your total monthly rental income (gross scheduled rent)
- Set the vacancy rate (5% is standard for stable markets, 8-10% for areas with higher turnover)
- Enter total monthly operating expenses (property tax, insurance, maintenance, management, HOA, landlord-paid utilities)
- Enter your monthly mortgage payment (principal + interest + any escrow)
- Review your monthly and annual cash flow, and the status assessment
Formula
Effective Gross Income = Monthly Rent × (1 − Vacancy Rate ÷ 100) Monthly Cash Flow = Effective Gross Income − Monthly Operating Expenses − Monthly Mortgage Payment Annual Cash Flow = Monthly Cash Flow × 12 Operating expenses typically include: property taxes (divided by 12), insurance (divided by 12), maintenance budget (typically 1% of property value ÷ 12), property management (8-10% of collected rent), HOA dues, and landlord-paid utilities. A common shortcut is the 50% rule: operating expenses for a typical rental property average about 50% of gross rent over time.
Example Calculation
For a property renting at $2,000/month with 5% vacancy, $600/month operating expenses, and $1,000/month mortgage: Effective Gross Income = $2,000 × (1 − 0.05) = $1,900 Monthly Cash Flow = $1,900 − $600 − $1,000 = $300 Annual Cash Flow = $300 × 12 = $3,600 At $300/month, this property exceeds the $200/month minimum threshold — a solid cash-flowing rental. The $3,600 annual cash flow also serves as a reserve buffer for unexpected repairs.
Frequently Asked Questions
What is a good monthly cash flow for a rental property?
Many investors target a minimum of $200 per month per unit after all expenses and mortgage. Properties generating $300-500/month per unit are considered strong. In high-cost markets (San Francisco, New York), even $100/month positive cash flow may be acceptable if the property has strong appreciation potential. In the Midwest or South, $200-400/month per unit is common.
What is the 50% rule for rental property expenses?
The 50% rule estimates that operating expenses (excluding mortgage) will average about 50% of gross rent over time. For a $2,000/month property, expect about $1,000/month in operating expenses. This includes taxes, insurance, maintenance, vacancies, management, and capital reserves. It is a rough estimate useful for quick analysis — actual expenses vary by property age, location, and management style.
Should I include capital expenditures in operating expenses?
For cash flow analysis, you should include a monthly reserve for capital expenditures (roof, HVAC, appliances, flooring) even though you do not spend this money every month. A common reserve is $100-200/month for a single-family home. This money accumulates until a major expense occurs. Without this reserve, a new roof could wipe out years of cash flow.
What causes negative cash flow?
The most common causes are: over-paying for the property (purchase price too high relative to rent), high interest rates (larger mortgage payments), under-estimating expenses, excessive vacancy, or market conditions (rents declining). If a property has negative cash flow, evaluate whether it is temporary (fixable with a rent increase or refinance) or structural (the numbers fundamentally do not work).
Is cash flow the same as profit?
Not exactly. Cash flow is the actual money you receive. Profit (or taxable income) is different because depreciation reduces your taxable income without reducing cash flow. A property with $3,600 annual cash flow might show only $1,000 in taxable profit after depreciation — or even a paper loss. Conversely, cash flow does not account for principal paydown, which is a form of wealth building but not cash in your pocket.
How does vacancy rate affect cash flow?
Vacancy directly reduces your income. Every 1% of vacancy on a $2,000/month property costs you $20/month or $240/year. The difference between 5% and 10% vacancy is $1,200/year in lost income. Vacancy rate depends on your market, property condition, pricing, and management quality. Track your actual vacancy and adjust your projections based on experience.