How to Use the Rental Property Cash Flow Calculator

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cash flow calculatorI am proud to announce a custom-made cash flow calculator is now available on InvestFourMore! The cash flow calculator can be found right here and is also on the top menu under “tools.” This is not a basic cash flow calculator that only figures the rent minus the mortgage payments. This cash flow calculator accounts for taxes, insurance, maintenance, vacancies, property management and of course the mortgage payment.

Why is a cash flow calculator important?

I am a strong believer that cash flow is the most important part of investing in long-term rental properties. Appreciation is nice, but you can’t count on appreciation.  If you have plenty of cash flow, then you can survive a drop in prices and appreciation is a bonus.

 How does the InvestFourMore cash flow calculator work?

This calculator accounts for the expenses you will encounter when owning a rental property. There is much more to consider than just mortgage payments, taxes and insurance. To get an accurate idea of cash flow you need to consider maintenance, vacancies and property management if you are not going to manage the homes yourself.

How to account for maintenance when calculating cash flow

It can be difficult to account for maintenance when calculating cash flow because all properties are different. Some properties are newer, some are older, some are remodeled and some aren’t. The older the home, the more likely it is that there will be more maintenance needed.

I tried to account for maintenance costs by creating a table with different percentages of maintenance needed based on the age and condition of a home. I created three property condition categories; newly updated, some updating and average. I figure any home that is going to be rented should be in average condition or better. Average condition would mean the house is in decent shape, but may not have been updated for ten years and has aging systems like hot water heaters or a furnace. Some updating would mean the home has mostly new systems, but might not be completely remodeled and has some aging systems. Newly remodeled means the home has been recently built or almost everything has been replaced and redone in the last year or two.

The custom maintenance table couples the condition of the home with the age of the property to give you a percentage of the monthly rent to use for maintenance.  The newer the home, the less maintenance needed.

How to account for vacancies when figuring cash flow

Vacancies are hard to figure, because every area has a different rental market. A basic figure to use is 10% of the monthly rent as vacancies. Your vacancy amount can be much higher than this if you invest in an area with a lot of turnover. Remember if you have a house vacant for a month, you also have to pay utilities for that month as well as missing rent payments.

For multifamily properties I increased the percentage for vacancies because they typically have higher turnover than single family homes.

What should a property manager cost when considering cash flow?

Property management fees also vary by region and town. Many companies charge 10% of the rents for property management, some charge 12% and some charge leasing fees as well. We used 12% as our default rate because we assume you could find a property manager that charges 10% with some leasing fees as well. You can adjust this value up or down if you know what your management costs will be.

Figuring taxes and insurance with cash flow

The tax rates should be fairly easy to find for properties if they are listed online with a local assessor or treasurer. If not, Zillow gives an estimate for taxes and insurance. Zillow is not always accurate, but this will at least give you an idea on those costs. Remember if you already have a mortgage in place or a good faith estimate from a lender, they may have included your taxes and insurance into your payment.

Figuring your mortgage payment for cash flow

A mortgage payment is not a simple formula to figure because you have to account for principal and interest on an amortized loan. We have provided a link to that will provide you with your mortgage payment based on the loan amount, interest rate and the length of the loan.

If you have a loan with mortgage insurance, be sure to add this amount to the mortgage payment. Mortgage insurance is common on loans that require a down payment of less than 20%. For more information on qualifying for a loan, check out this article.

Other costs to consider when calculating cash flow

Depending on what type of property you own, you may have to pay utilities, HOA dues, snow removal  or other costs. All costs need to be considered when calculating cash flow. To find more information on rental rates and renting a home, please check out this article. I Hope you enjoy the calculator and can put it to good use!

This post may contain affiliate links and I may be compensated if you make a purchase after clicking on my links.


  1. Michelle February 18, 2014
  2. Grace February 13, 2014

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