Rental Property Cash Flow Calculator

Rental property is a popular investment among healthcare professionals, but the numbers need to work. This calculator estimates monthly cash flow after the mortgage and all operating costs, plus the cap rate and cash-on-cash return used to compare properties.

What this calculator does

Enter the purchase price, down payment, closing and initial repair costs, mortgage rate, monthly rent, vacancy rate, property tax, insurance, maintenance, property management and HOA or other monthly costs. It shows:

• the monthly cash flow,
• net operating income (NOI) per year,
• the cap rate,
• the cash-on-cash return,
• the cash you put in, and
• the mortgage payment.

The formula in plain English

Effective rent = monthly rent × (1 − vacancy rate).

Operating expenses = property tax ÷ 12 + insurance ÷ 12 + rent × (maintenance % + management %) + HOA and other costs.

NOI = (effective rent − operating expenses) × 12. NOI is what the property earns before the mortgage.

Mortgage payment = the standard 30-year loan payment on price minus down payment.

Monthly cash flow = effective rent − operating expenses − mortgage payment.

Cap rate = NOI ÷ purchase price.

Cash in = price × (down payment % + closing and repair %).

Cash-on-cash return = yearly cash flow ÷ cash in.

A worked example

Dr. Ellis is looking at a $350,000 house that would rent for $2,600 a month. She'd put 25% down, spend 3% on closing and repairs, and borrow at 7.15%. She budgets 6% vacancy, $4,200 a year in property tax, $1,800 in insurance, 10% for maintenance and 8% for management.

• Effective rent: about $2,444.
• Operating expenses: about $968 a month.
• NOI: about $17,700 a year, a 5.1% cap rate.
• Mortgage: about $1,773.
• Cash flow: about −$297 a month.
• Cash in: $98,000, with a cash-on-cash return of about −3.6%.

At $2,900 rent, cash flow would be close to breakeven. Dr. Ellis would need a lower price, higher rent or a larger down payment for this to produce income.

Why it matters at each career stage

If you're: Employed

Make sure your emergency fund, retirement savings and debt plan are in good shape before buying a rental. Rentals are time-consuming and less liquid than index funds, and repairs can be large and sudden.

If you're: Practice owner

Some practice owners buy their own office building. The same math applies: compare rent paid to your practice with the building's costs, and consider whether owning ties up too much capital.

Beyond cash flow

Loan paydown. Part of each mortgage payment builds equity.

Appreciation. Home values may rise over time, though not every year.

Depreciation. You can deduct the building's value over 27.5 years, which can lower taxes on rental income.

Risk. Vacancies, bad tenants, big repairs and local market changes can turn a good deal into a bad one.

Time. Self-managing saves the management fee but takes time, which is scarce for clinicians.

Rules of thumb investors use

Some investors use quick screening rules, like the "1% rule" (monthly rent of at least 1% of the price) or a minimum cap rate for their market. They're useful for sorting through listings quickly, but they don't replace running the full numbers. In many expensive markets, few properties meet the 1% rule, and a property that does may come with higher repair needs or vacancy risk.

Checking the numbers

Get real rent comparables. Look at similar rentals nearby.

Get quotes. Insurance and property tax can vary a lot.

Inspect carefully. Older roofs, HVAC and plumbing need bigger maintenance budgets.

Stress-test. Try higher vacancy and repair numbers to see your worst case.

Next, see the full mortgage payment, decide whether to invest or pay off debt and track your net worth.