Understanding Rental Income

Investing in real estate can generate a steady stream of cash, but expenses like maintenance, repairs, insurance, and financing costs can quickly erode profits. This calculator provides an easy way to model your property’s monthly performance. Simply input the gross rent you expect to collect each month, estimate your non-mortgage expenses such as property taxes, insurance, utilities and upkeep, and include your mortgage payment. Vacancy is inevitable, so enter your anticipated vacancy percentage to account for occasional months without tenants.

Formula for Monthly Cash Flow

The cash flow $F$ is the rent collected after vacancy minus expenses and loan payments. If $R$ is monthly rent, $v$ is vacancy rate as a decimal, $E$ represents other expenses, and $M$ is your mortgage payment, then: $$F=R(1-v)-E-M$$. A positive value means you earn money each month, while a negative value indicates you’ll need to contribute additional funds to cover costs.

Sample Monthly Breakdown

Rent	Vacancy	Expenses	Mortgage	Cash Flow
$1,500	5%	$200	$900	$325
$1,200	8%	$150	$750	$206

Planning for the Long Term

Positive cash flow is only one piece of the puzzle. You may also gain from property appreciation and tax deductions. However, sudden repairs like a new roof or appliance replacement can wipe out profit for months. Keep a reserve fund and revisit your numbers annually as insurance premiums, property taxes and rental rates change. If cash flow is consistently negative, consider increasing rent where possible, refinancing, or reducing expenses through efficient property management.

The new fields above let you see how management fees and your upfront investment impact returns. Calculating cash-on-cash after accounting for down payment costs helps you decide if another property might yield better results.

Whether you’re evaluating a new purchase or tracking an existing investment, regularly forecasting cash flow gives you confidence that your rental fits your financial goals.