Rental Property Cash Flow Calculator
Calculate monthly cash flow on a financed rental property by subtracting the fully amortized mortgage payment from rental income. Use it when comparing rental properties to find which deal produces the strongest returns.
About this calculator
Monthly cash flow equals rent minus the mortgage payment on the financed portion of the property. The mortgage payment is derived from the standard amortization formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the loan amount (property price × (1 − down payment %)), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (loan term in years × 12). Cash Flow = Monthly Rent − M. A positive result means the property generates income above its debt service each month. Note that this simplified model excludes vacancy, property management fees, maintenance, taxes, and insurance—real-world cash flow will be lower, so investors typically subtract an additional 30–40% of rent for operating expenses before comparing to the mortgage payment.
How to use
A property costs $250,000 with 20% down ($50,000), leaving a $200,000 loan at 7% interest over 30 years. Monthly rate r = 0.07/12 = 0.005833; n = 360. M = $200,000 × [0.005833 × (1.005833)³⁶⁰] / [(1.005833)³⁶⁰ − 1] = $200,000 × 0.006653 = $1,330.60. If monthly rent is $1,800, raw cash flow = $1,800 − $1,330.60 = $469.40. After applying a 35% expense ratio ($630), realistic net cash flow is approximately −$161/month, signaling the deal may need a higher rent or lower purchase price.
Frequently asked questions
What is a good monthly cash flow for a rental property?
A common benchmark is $100–$200 per door per month in net cash flow after all expenses, including mortgage, taxes, insurance, vacancy, maintenance, and management. In high-cost markets, investors sometimes accept break-even cash flow and rely on appreciation and loan paydown for total return. The 1% rule—monthly rent should be at least 1% of the purchase price—is a quick filter many investors use to identify properties likely to cash flow positively. Always run full numbers rather than relying on rules of thumb alone.
How does the down payment percentage affect rental property cash flow?
A larger down payment reduces the loan principal, which lowers the monthly mortgage payment and improves cash flow. However, it also increases the cash invested, which can lower your cash-on-cash return (annual cash flow divided by cash invested). For example, putting 30% down instead of 20% on a $250,000 property reduces the loan by $25,000, saving roughly $166/month in payments but requiring $25,000 more upfront. Investors must balance cash flow improvement against the opportunity cost of deploying more capital.
Why is cash flow only part of the picture when analyzing a rental property?
Cash flow measures income after debt service but ignores three other return components: principal paydown (your tenant effectively pays down your loan each month), tax benefits (depreciation and expense deductions), and appreciation (property value growth over time). A property with modest cash flow can still deliver a strong total return if it appreciates well and offers significant tax shelter. Conversely, a high-cash-flow property in a stagnant market may underperform a low-cash-flow asset in a growing city when total return is measured over a 10-year hold.