Rental Property Cash Flow Calculator

145 thoughts on “Rental Property Cash Flow Calculator”

  1. Loving the new Cash Flow calculator Mark! Excellent and incredibly priceless! Works great so far. A gazillion thanks Mark. Definitely a time saver.

    Gratefully,

    Jay

        • What about the water bill and electrical. do you have them pay that as well and how do you keep taps on it. Cause i know they can put a lien on your property for out standing water bills.. also how do you feel about Dave Ramsey saying only pay cash for a property versus financing.

          • Yes, the tenants pay, but the accounts are in my name and the tenants so if they get behind I get notified.

          • AS far as Dave Ramsey I think his ideas are way too conservative. He talks about going broke with real estate, but he was not buying rentals or flips, he was doing a very complicated strategy with commercial properties and a tax loophole. When that tax loophole was closed, he lost the advantages of buying horrible buildings with no cash flow. Debt can make you a lot of money if used right and wisely. Most of the largest companies in the world and richest people in the world have used debt to get there.

  2. Hey Mark, I just want to say thank you so much for everything you have written and shared with us! It’s been so helpful and encouraging! I’ve always wanted to own about 20 rentals one day, and you’ve really helped show me the path. I’m concerned about my area though, Battle Creek Michigan. I did really well on my first flip last year, made $33,000 total profit doing all the work myself. But those deals just never come around! I got lucky/ was blessed, but the market has changed. My question for you is: do you think there’s still money to be made in renting houses when the average cost of decent homes is $60,000 and the average rent is $650? Is the $3000 a year after property tax (2000) and insurance (1000) worth it?

    Thanks so much for your time!

    • Hi Matt, That is pretty tight for cash flow. Are those homes readily available now or are those really good deals that don’t come along much? I have to wait quite a while to find the great deals I get. Have you looked at different price ranges to see if the rent to value ratios change?

      • Hi again Mark, thanks for the reply!

        The $60,000 homes are fairly easy to come by here! I’ve read all your articles and know now it’s best to wait for those rare deals where the home is under market value and won’t take much to fix up (like my first flip last year $17,000 price and $3,000 repairs sold for $65,000). 95% of the time realtors snatch those properties up or sneak their friends and families the deal before showing the home to anyone else. And why wouldn’t they? I would do the same if I were a realtor. No hard feelings.

        Anyway, as for rent to value ratios, our market is kind of like yours in that area. The higher rents are extremely expensive houses, not worth it. But there are homes renting for 750-850 that are typically anywhere from 50,000-100,000 in price (severe repairs needed to fully updated and no work to be done).

        I’m starting to think renting doesn’t pay off here in Battle Creek, 45 mins west, north, or east and it would work great, but not here. So, maybe I can take up 5 more minutes of your time! I know your time is important, and I don’t want to waste any of it! But your opinion means a lot to me! I’m 25 years old, and so far ahead of all my peers! And I know I have the potential for greater and greater heights, I just have very few role models to emulate ya know? But that’s why I appreciate you!!!

        So what do you think about this idea: when I sell my current home this spring I should be left with about 50k in cash. I was originally thinking of buying a 50k house cash to fix up for living in and then mortgage for a rental about the same quality. BUT, now I’m thinking maybe get a 15 year mortgage at 3.75% for the full price of our next home and invest 30k or so in my mutual fund that consistently makes over 10% (for the last year it’s been making 20%). What do you think?

        Thank you so much for your time Mark! I won’t bother you much more I promise 🙂

        Matt

        • Hi Matt, no worries about asking questions, I am happy to help. Have you thought about investing in places 45 minutes away? It may be worth it if it makes a huge difference in returns. I personally don’t like investing in mutual funds or the stock market. I have no control over returns; things are going great now, but a few years ago people lot 30 to 50% of their investments in the market.

          If you are just starting out, I would take advantage of being able to get 30 year fixed rate loans. If you want to pay off the loan early, you can, but you can also keep saving up money to invest and you should be able to invest it at a higher rate than the interest rate on the loan.

  3. I haven’t considered it! I will now though.
    Perhaps I should look into buying an apartment complex.. I saw an 8 unit for $320,000. Rent is $650-$700 each. I’m not sure if insurance and taxes are abnormally horrible or something, but $5,200 a month seems like it just can’t go wrong.

    Thanks again for your replies! I appreciate it so much

  4. Thanks, Mark. This is an excellent resource for calculating cash flow. I appreciate you sharing the spreadsheet. What are your thoughts on the 50% rule?

    • Thank you Larry! I don’t like the 50% rule, it assumes too much across different markets. My taxes are very low in my area, but in an area with taxes 5 times higher the 50% rule treats the properties the same. I think cash flow should be calculated, not assumed based on the 50% rule.

  5. Hi Mark

    This is regarding your comment :
    “I personally don’t like investing in mutual funds or the stock market. I have no control over returns; things are going great now, but a few years ago people lot 30 to 50% of their investments in the market.”

    I was wondering why in the media and research studies etc.. on how the wealthy mostly invest in the stock market, Is it true? There must be some value to that? What are your thoughts …

    Thanks
    Ron

  6. Hi Mark,

    Let me first start by saying I am totally impressed by all your information, insight and success. Thanks for sharing your knowledge and experiences and best of luck to you in reaching all your goals.

    I think I have been overcomplicating real estate investing by thinking I need to factor in the depreciation and after tax calculations also. Your Cash on Cash and Cash flow calculators are so simple. Maybe I shouldn’t be so concerned about those issues at least in the initial investment analysis. Do you have anything that covers this topic.

    Also, do you have anything regarding investing from an IRA?

    Many Thanks!

    Morey

    • Hi Morey,
      Thank you! My thoughts are to concentrate on the cash on cash and cash flow without tax factors and the tax factors are a bonus. I don’t have anything yet about investing from an IRA. I had a couple people who were going to do guest blogs on it who never came through. I am not an expert on it by any means.

  7. Thanks Mark for an awesome calculator. I have a question; what do you think should be the average CF on a townhouse for about 215k, putting 20% down?
    and how much of a CF is generally considered good?

  8. Hey Mark,

    How do you feel about Four Plexes? I’m looking at one now that get 2500 in monthly incomes between all 4. Is currently all rented. Listed at $250k. Thoughts?

  9. Hey Mark, thanks for the use of the calculator. What do you think of a 3br 2.5ba duplex for 165K renting for 1700/mo. It is in a great area with good schools.

  10. Mark,
    I have been reading your site for almost a year now. I am ready to get started with my first rental property. I have been pre-approved for a loan (a rock solid pre-approval, not one of those flimsy kinds). My big hang up is multi-tentant vs single family home. If $500 is the goal for cash flow what makes more sense….a $100,000 single family at $1200 monthly rent OR $225,000 multi-tentant at $2400 monthly? The multi-tentant property will certainly have more vacancies at that lower rent price. I understand how you have also mentioned that people care for their single family residence more. The thing is I just can’t get past the idea that the cash flow will be much larger in the future for a moderate increase in the purchase price of the rental property. This cash flow analysis process is driving me bananas.

    Your advice would be appreciated.

    • Hi Julius, You could buy two single families and have 2400 rent coming in for $200,000. A lot depends on you location and rents in your market. If the rents are much higher on a multi it may make sense to go that route, in my area they are much lower on multis. It takes a lot of analysis and you could always buy one of each to see which one you like better.

  11. Mark – When you say that you usually want to see $500+ in cash flow. Is that the initial cash flow or final cash flow number in the calculator? Just curious if you’re shooting for $500 CF before or after considering the potential for vacancy/repairs.

  12. Hey there Mark! Like others have said, thanks so much for the awesome content and calculators. Currently on the cusp of making this deal, and wanted to get some confirmation…or not. So this property is close to a University in the Chicago area and should be able to be rented for anywhere between 1200-1400. Unit is priced at 92k, HOA at 180, Taxes 2k, Annual insurance at 300/yr. Ive calculated C-on-C returns to be 20%. Big question…go or no go? Thanks again!

  13. hi Mark,

    Should we be paying Income tax on the “Initail Monthly Cash Flow” or the “Final Monthly Cash Flow”? Also what if the “Final Monthly Cash Flow” is negative – meaning I need to shell some money to keep the property rented?

    Thanks in advance for your response

    • I don’t figure in income tax since all money I make will be taxed. the nice thing about real estate is it will most likely be taxed much less due to depreciation. It is usually not a good investment if you have negative cash flow

  14. I am currently renting out our home as we bought a new one. I am renting it in Sac. for 1250 a month. 3 bedroom. 2 bath single family home. My question is I am making about 300 a month. My mortgage with taxes is 910.00 a month. Insurance is about 450.00 a year. Plus I pay 66.00 every other month for pest control. I am not sure this is worth my while. It’s stressful and if something breaks I am in trouble. Thoughts????
    Thank you.

  15. Mark,
    I currently have a 4 bedroom / 2 full bathroom single family home under contract to purchase as a rental, but am doubting the decision after ready some of your comments. I am buying the home for $168,000. It will cost me $1,028 per month (P&I, taxes, insurance, annual HOA) with a 30 yr loan. It is a newly renovated home with good mechanics and good cosmetics and has a low maintenance exterior. I can rent it for between $1,400 – $1,495 per month. I don’t need to pay for any property management. What are your thoughts? Also, what is the most effective way to leverage this home in the future to purchase another assuming you would recommend I buy this one? The appreciation on this home will be minimal over the years as it is not the most popular floor plan. But, it won’t likely lose value….. In a desirable area.

    • Are you buying it at full retail value? I try to buy everything below market. Sounds like an okay deal if you are getting it below market.

  16. Hi Mark,
    I have a savings of $28000. I have a Home that I bought for $102,000 and refi’d @ $75000. I now have close to $50,000 in equity in the home.

    I want to invest in a 3 bdrm/1bath house @ $70,000 with a guesstimate of $40,000 in repairs.

    The neighborhood is great, comp rents are $1200/$1300/$1400.
    Sale price directly across the street is $200,000.

    What steps can I take to: Buy House
    Keep as much personal money as possible
    Streamline entire process.

    Thank you for your reply.
    -Mark

  17. Hi Mark,
    I just purchased a Triplex for $136,000. Monthly mortgage $745 (P&I, taxes, insurance) Monthly Rent is $1650. I am managing the property myself. Property is separately metered. I am paying W/S/G which averages $260/month. The property was built in 1909 but has been updated over the years. There is some older wiring and plumbing that will likely need attention in the near future. I purchased the home with tenants in place, 2 of which have been there over 5 years and want to stay. The appraisal value came in right at my offer price of $136000 (go figure). I wanted to ask you about your thought on the property based on what I have told you and also what are the main updates I can do to boost the value of the property?

    • Sounds like a decent deal, but to really know you would need to look at other comps to see what they have sold for. An appraisal does not tell you much.

  18. 1 bought triplex 1 3 bedroom 2 2 bedroom forclosed for 47500 all have seperate utilitys i pay water and hot water financed with 25 percent down 10 year morgage rent is 600 3 bedroom and 550 for 2 bedroom should i sell or keep owe 20 k and 5 years on morgage?

  19. hi mark ,

    i have already sent my email to your website .
    [email protected]
    this is a surrey property .
    price $ 165,000 fourplex
    rent $ 2900
    net income per year is $ 19000
    mortgage amount is $ 132,000 . 30 year . 5 yr term
    kindly let me know cash flow and ROI .

  20. I believe your website has a bug or a hosting problem. None of the calculator are appearing and most of the images are no loading. This just started happening within the last few days. Just wanted to let you know.

  21. Hi Mark,

    I wanted to see how has your experience been investing in rental investments in South Florida? What cities are you targeting and what kind of properties?

    Thanks
    Ashish

      • Thank you for prompt response Mark. I was hearing one of your webinars and it mentioned it was a 2016 target for you.

        Any particular reason you discounted South Florida? I see some neighborhoods in South Florida – Palm Beach County which still have a good cash on cash return and still havent appreciated to 2007 prices.
        Any other Florida cities on your target list?

  22. Hi Mark,
    I have a 4BD, 3 bath single family rental that I owe about $159k on and am renting it out for $1,700 a month. My mortgage is $1,100 so making about $600 a month from it. House just appraised at $256k. I also inherited some land that I’d like to build at least two units on to rent or sell. Do you think I should keep or sell my first rental to get the cash to build on the new land?

  23. Hello,
    I’ve heard that transactions involving vacant land are complicated and stressful for an agent with years of experience. I’ve also heard that a license doesn’t cover enough about vacant land transactions, Which states cover vacant land the best.

    • I think vacant land transactions are pretty easy. If you start involving water, mineral rights, and other issues it can be tougher. But those things can come with regular house transactions as well.

  24. Hi Mark,

    I am struggling with the calculation including principle payments. I don’t see this as a cost. You obviously have to pay this as part of your mortgage every month (if you financed), but this payment would be accretive to your asset value.

    I’ve noticed a lot of resources online treat the principle payments as a deduction but I would disagree with that. Can you help me understand why that would be incorporated in a cash flow calculation?

    I appreciate your input, thanks!

    • This is calculating your cash flow, not total return. It is meant to show you how much cash you bring in every month. Yes, the money paying down the mortgage is part of the return, but you do not see that cash in your pocket.

  25. HI Mark currently looking at 5 units of town homes all are renter out @ 900 a month I can get the property for right at 400k. After mortgage and if all stay renter I’m looking at about 2100 a month in cash flow. Is this a good deal. I like knowing I have the flexibility of 5 units vs 2 townhomes as more room for better flow. What are your thoughts. Thanks.

          • Yes HOA fees are 550 a year for the whole building. I was using your using your guide for maintnance cost to sit aside. IF I can get these for 420k or under would you think this is a good deal? If all the leases hold and based on the history should cash flow 1500-1700 with maintenance fig in a month. Thanks for your input.

  26. Hi Mark,

    The Maintenance and Vacancy costs are a percentage of the monthly payment I will charge for the rent or it is a percentage of the total cost of the property?

    Thanks,
    Beatriz

  27. I like the maintenance percentage table you have. I guestimated 10% on my first building (45 trs old average condition) and learned a tough lesson.

    I built a real estate calculator as well that shows both the total return, cash flow, and cash on cash return. I set the default maintenance to 10%, but is probably too low of a number for the average new investor.

  28. Hi Mark,

    How do you factor in the size of your deposit when looking at cash flow? The larger the deposit, the less your monthly loan repayments would be. This could turn your cash flow positive, but would mean you have tied up more of your money. If you manage to get 100% finance, then your monthly payments would be higher, making it difficult to get a positive cash flow. I’m battling to decide on what deposit to aim for. What would you recommend?

  29. Can you help me understand how to apply the Maintenance table? Am I assuming correctly that the percentage is applied to the purchase price of the property?

    So the monthly maintenance cost is equal to:
    (Purchase Price) x (Maintenance %) / 12

    Thanks!

  30. Hi, I’m looking to or an offer on a duplex. Listed 255k and I would like to offer 235k with seller giving back 6% towards Closing cost and repairs, keep, fingers crossed. However, mortgage including p&i ,taxes and insurance, im looking at a mortgage of 1550 plus $100 for water with 10% down payment.Currently, both units are renting for $950 which is way under market. I think I could rent it for 1200 for each side 2/1. Total rental 2200 a month. Monthly mortgage $1550. I should make about 550’to 650 per month. Is that considered a good deal? I maybe buying the home at market value.

    • After expenses you will not be making that much money. You will have vacancies, maintenance, and is there an HOA or any utilities you have to pay?

    • Hi Monique,
      I have a triplex and make great cashflow on it. When I look at your numbers they are not bad but there are details that you are missing. I think you might be missing a vacancy rate of 10%, landlord insurance which on each of my units is $140 a month (i’m in a high area), long term and short term maintenance. Did you ask for at least 2 years rent roles and maintenance? To let you know how i look at deals, I try to make sure that if I have any units empty that the others can cover the mortgage within $100. You need to prepare for the eventuality of floods, evictions, and other costly expenses. Don’t let them scare you, know that they will happen at some point.

  31. I can’t seem to find a good single family home to use as a rental. I haven’t been assuming a discount on the market price, but If I use the market price, I’m getting deep negatives in the cash flow calculator. I don’t know how you get such good deals in your “Build a Rental Property Empire,” but the houses I find in my area have a rent to price ratio of about 0.6%, which is making this very hard. I’m also just assuming a flat 30% total rent for management, vacancies, and maintenance combined. Most of them have HOAs above $200 and have CDD fees on the taxes. The only cases where this (on average) doesn’t apply, is in areas that I personally know to be rough parts of town, and wouldn’t even want to drive in. Also, I know from my own home that these houses need hurricane insurance. Seriously, DEEP negatives. Any suggestions? I’m in Tampa Bay area.

    • I stay away from rentals with HOAs as that typically takes all the profit. Different areas do not work well for rentals. I have heard a lot of people like Tampa, but I do not know personally what they are investing in. Taxes and insurance can also make a huge difference in areas. Have you looked outside the Tampa area?

  32. According to Grant Cardone, its absolutely wasteful to buy single family houses and rent them, he says buy buildings with many units, like 4-5 unites, your cash flow will be higher proportionaly compared to a single family house. He even has a rule that you shouldn’t buy under 16 units buildings but of course if you can’t afford it you should start with 3-4 units. So what do you think about that?

    • There are many different strategies that work. He also said it was dumb to buy a house to live in which I think is horrible advice. Multifamily apartments are extremely overvalued in most parts of the country right now. In Colorado you make less money with them than with single family at least in my case.

  33. Hi Mark,
    It looks like the calculator isn’t working. Here is what it says on the site where the calculator should be:
    “[CP_CALCULATED_FIELDS id=”6″]”

    Please let me know when it’s back up! Thank you!!!

  34. Do you recommend buying entirely new houses and renting them out? I have a house already in South Austin and renting out 3 of the 4 rooms. Im planning to get a entirely new property in North Austin. Buying a new property or older property which do you recommend?

  35. Hi Mark , bought my 1st rental specific property year ago about to be my second. I have a question about how you use the vacancy find. Replace lost income or pay the mortgage on empty structure. Do you pool these for all the properties in one account or do you have separate savings accounts for all of them.

    • I have separate account for all of them because I have them each in their own LLC. You could pool the money if they are all in your name

  36. Hi Mark
    I have recently bought a house for rental purposes and management fee is a lot, the property was in good condition and up to date. But the rental property agent was charging fees like to the roof. Would it be better to manage yourself ?
    thanks
    Susy

  37. Hi Mark
    I’m looking for a rental property in Indianapolis IN but the lowest rent ready properties I can find in a $700+ per month rental area are at least $50K. With an equity loan on my primary home to finance it that leaves me with a negative cash flow every time. The only thing I can do is be patient and just save more money for a bigger down payment, right? I just don’t have that cash right now. Do I take a bet on a property that I think is in a good appreciation area and go negative cash flow, or do I get one that’s in a stagnant area but which costs less and gets me some positive cash flow (but still not much).

  38. Mark,

    I have a small house in Statesville North Carolina very similar to the ones you have in Colorado. It’s small, a little over 1000sqft. The house needs to be completely renovated due to a fire. It will need to be gutted but the structure is still in tact. There is minimal damage to the outside actually. Can you give me a rough estimate based on the location of it being in NC? The media home price in that area is about 55-70k.

    • The cost to repair? First off you need to have a contractor look at it. Even if the structure looks okay, it may need torn down due to smoke or other damage you cannot see. I had a house that caught on fire and the outside looked fine, but we had to tear it down to the foundation. I would say you are looking at more than it is worth to rebuild it even if the structure is good.

  39. Hi Mark,
    I really appreciate your Cash Flow excel documents and have used them often! I have a question about amortizing renovation costs. We are considering putting a basement suite into a house we currently live in. My question is.. say the renovation to build a legal suite costs $20,000. To figure out if the property will cash flow after renovations do I need to account for this $20,000? Do I take this $20,000 which will be on a line of credit (HELOC) and add it to my monthly expenses?

    • Yes, you need to figure them. If you are paying cash it would be a down payment cost or repair cost. If you are financing it you would add the monthly payment as an expense.

  40. Hey Mark,

    I am a college student very interested in real estate. I recently bought your book and have been researching the market in my area. I live in Indiana and believe that I’m in a prime location to by once a graduate next year as I already have a job lined up after school as a sourcing specialist at a manufacturing company. Property taxes here are about as cheap as Colorado, and insurance is low too. There is a 3 bed room home built in 1981, in great shape on the market for 59,000. It is also 1 mile from a major university and students here pay 900 a month to live in dorms and 1500 split three ways to live in the university apartments. This houses mortgages would be 251 dollars a month and believe I could rent it to 3 college students for 1500 as it is bigger and nicer than the university apartments. After figuring in low taxes, maintenance, and insurance, I figured a cash flow of 689 dollars a month. Is this a good investment? Like a said I’m young and new at this but think this home and many other ones in my area are very appealing buys. If you have any advice that would be great. Thanks

  41. Hi I was told that making the tenant lease agreement similar to the credit card terms of agreement in case tenants get behind with rent (and still owes you after evicting) and/or do property damages that security deposit couldn’t cover. Is it a good idea? What would you suggest or recommend link(s) to read up on lease and protecting self from extreme expenses as well as court lawsuits/fees? Also, how do I find the right lawyer to help with making the lease airtight? Thanks!

  42. Hi Mark, I just started listening to your podcasts and my wife just finished your book on rentals. We really want to get into investing in rental units, we have an okay savings but lack the 25% that the bank is looking for, especially if we are going to have any left over after the purchase for a safety net. We were informed of the option of purchasing a property as a second home (to avoid the 25% down) and living in it for a year while we rent our our current home. After the year we were told that we could move back into our current home. My question to you is, would we be crazy to do this? We really want to do this thing and we just don’t see ourselves being able to afford that 25% for a some time. Thanks so much!

    • I think this is a great idea. You do not have to buy it as a second home either. If you are living in it as an owner occupant you should be able to buy it as as your first home so to speak. Many people do this over and over.

  43. Hi Mark, I am currently reading your book and you state many times that you require a cash on cash (COC) ROI > 15%. I live in Winnipeg, Canada and I have been doing calculation with my realtor and the best COC ROI I can get is about 10%. However, to get COC this high it is on older house(1900s) on the “bad” side of town. I recently talked to a new REI who owns about 15 rentals in WInnipeg and he said his strategy is to buy high quality rentals that Net zero cash-flow. This way he attracts high quality tenants, does not pay tax and has a higher priced house to appreciate (i know in the book you said don’t count on appreciation!).

    1. What do you think about this net zero cash-flow strategy?
    2. You don’t count on appreciation, is that why in the cash flow calculator you count principal for mortgage as a cost, even though the mortgage principal being paid by the tenant is technically cash in the bank?

    Thanks Mark!

  44. Hi Mark. I’m looking to buy my first property, a duplex, and live in one side and rent out the other. I’m wondering how I add my side of the duplex into the calculations. Do I consider what I’m paying towards the mortgage as rent too? Is my rent part of the income? I can’t wrap my head around what the right answer would be.

  45. Hi Mark,

    Loved your book (How to Build a Rental Empire)! I understand the strategies covered in the book do not cover any areas on the east. I live in northern New Jersey where single family AND multifamily homes can range from 300k to 385 k. I was hoping to ask if you can refer me to any quality real estate agents for investors that can help? Any contractors? Also, if you may know any parts that are great places to start. Using rent range many times returned back rents that end up cash flowing about 550 to 660 a month accounting for water, insurance, taxes (which are notoriously high), and mortgage not including vacancies and maintenance. I’m dying to just take the plunge on buying a home but with prices this high I have to make sure my research is accurate! What would you suggest I do?

    -Alex

    • Thank you, but I would disagree with the strategies do not work in the east.

      1. There are different areas in the East. SOme places in UpState NY have awesome rental markets. There are many other areas outside of big cities or in big cities like Phili, Pit, etc.
      2. You can also look at other rentals besides SFR to find good deals.
      3. NJ has super high taxes which makes it tough. Have looked at other markets?

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