Get a detailed monthly income versus expense breakdown for your rental property — including vacancy, maintenance, CapEx reserves, and a 50% rule sanity check to see if your numbers add up.
Cash flow is the lifeblood of a rental portfolio. Many landlords underestimate expenses by forgetting vacancy losses, CapEx reserves, and management fees — then wonder why the property feels like a money pit. This calculator forces a realistic expense view, including the capital expenditure reserve that most beginners ignore but experienced landlords know is critical.
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Cash flow is the monthly profit (or loss) after all income and expenses are accounted for — including the mortgage. Positive cash flow means the property pays you. Negative cash flow means you're subsidizing tenants while betting on appreciation. Neither is inherently wrong, but you need to know which situation you're in.
A widely used landlord heuristic: operating expenses (everything except the mortgage) will equal roughly 50% of gross rent over time. This includes taxes, insurance, vacancies, repairs, maintenance, management fees, and CapEx. If your rent is $1,800/month, budget about $900/month in non-mortgage expenses. The remaining $900 goes toward debt service. If the mortgage is less than $900/month, you cash flow. The 50% rule is a rough estimate — actual ratios depend heavily on the age, condition, and location of the property.
Monthly rent should equal at least 1% of the purchase price. A $200,000 property should generate $2,000/month in rent. This rule was created as a quick screen in an era of lower home prices; in most 2024–2025 markets it's very difficult to achieve with conventional financing. It remains useful as a relative comparison between deals.
CapEx is money set aside for large future replacements: roof ($8,000–$15,000), HVAC system ($5,000–$10,000), water heater ($800–$1,500), appliances ($500–$2,000 each), flooring ($3,000–$10,000). If you don't reserve for these monthly, a $12,000 roof replacement will wipe out 1–2 years of cash flow. Most experienced landlords set aside $100–$200/month per unit for CapEx, more for older properties.
Full-service property management typically costs 8–12% of collected rent, plus leasing fees (50–100% of one month's rent when finding a tenant). Self-managing saves money but costs time — budget roughly $40–$50/hour for your time spent managing. If you're out of state or managing multiple properties, professional management often makes sense at 8–10% of gross rents.
There's no universal answer — it depends on market, property price, and strategy. Many investors target $100–$300/month per unit as a minimum. Some in high-appreciation markets accept break-even or slight negative cash flow. As a general rule, positive cash flow of at least $100/month per unit provides a buffer against vacancies and unexpected costs.
The 50% rule is a useful starting point but not a precise tool. Newer properties in low-tax areas may have expense ratios of 35–40%. Older properties in high-tax states with property management can exceed 55–60%. Use this calculator for more accurate projections — but always stress-test your numbers with higher vacancy and maintenance estimates.
Cash-on-cash = Annual pre-tax cash flow ÷ Total cash invested × 100. Cash invested includes your down payment plus closing costs and any immediate rehab costs. Annual cash flow is your net income after all expenses including the mortgage. Enter your purchase price and down payment in the optional section above to see your CoC return.
Possibly, depending on your market. Break-even cash flow means a tenant is paying down your mortgage for you (wealth building through principal paydown) and the property may be appreciating. In high-cost markets, many successful investors hold properties at break-even or slight negative cash flow and build wealth through equity and appreciation. The danger is that negative cash flow requires capital from other income sources — if your income drops, you must still cover the shortfall.
NOI (Net Operating Income) excludes mortgage payments — it shows the property's pure operating profitability independent of financing. Cash flow includes the mortgage payment (debt service). A property can have strong NOI but negative cash flow if the mortgage payment is high. Cap rate calculations use NOI; cash-on-cash return uses cash flow after debt service.