Rental Property Cash Flow Calculator

Rental property cash flow is the money remaining after collecting all rent and paying all property-related expenses, including the mortgage. Positive cash flow means the property generates more income than it costs to operate. Negative cash flow (also called 'feeding the alligator') means out-of-pocket payments are required each month.

Cash Flow = Gross Rental Income - Vacancy Loss - Operating Expenses - Debt Service. Operating expenses include property management, property taxes, insurance, maintenance, and utilities. Debt service is the monthly mortgage payment (principal + interest).

Standard operating expenses for a rental property include: property management fees (8 to 12% of rent), property taxes, landlord insurance, maintenance and repairs, capital expenditure reserves, utilities paid by the landlord, and accounting or legal fees. Do not include mortgage principal or interest in operating expenses; those are debt service.

A commonly used rule of thumb is to budget 1% of the property's value per year for maintenance and repairs. On a $200,000 property, that is $2,000 per year or about $167 per month. Older properties or those with deferred maintenance may require more. Setting aside a capital expenditure reserve for major items (roof, HVAC, appliances) is also recommended.

The 50% rule is a quick estimation tool: assume that operating expenses (excluding debt service) will total approximately 50% of gross rental income. If a property rents for $2,000 per month, budget $1,000 for expenses. The remaining $1,000 covers the mortgage payment; anything left is cash flow. This is a rough heuristic, not a substitute for detailed analysis.