Cash Flow Calculator Formula

Understand the math behind the cash flow calculator. Each variable explained with a worked example.

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Formulas Used

Annual Before-Tax Cash Flow

annual_cash_flow = net_operating_income - annual_debt_service - capital_reserves

Monthly Cash Flow

monthly_cash_flow = (net_operating_income - annual_debt_service - capital_reserves) / 12

Cash Flow Margin

cash_flow_margin = ((net_operating_income - annual_debt_service - capital_reserves) / net_operating_income) * 100

Variables

VariableDescriptionDefault
net_operating_incomeAnnual NOI(USD)42000
annual_debt_serviceAnnual Debt Service(USD)30000
capital_reservesAnnual Capital Reserves(USD)2400

How It Works

Property Cash Flow

Cash flow is the money left over after paying all operating expenses, debt service, and setting aside reserves.

Formula

Cash Flow = NOI - Debt Service - Capital Reserves

Importance

  • Positive cash flow means the property pays for itself and generates income
  • Negative cash flow requires out-of-pocket funding each month
  • Cash flow funds your reserves, covers unexpected expenses, and provides income

    • Worked Example

    A property has $42,000 annual NOI, $30,000 debt service, and $2,400 in capital reserves.

    net_operating_income = 42000annual_debt_service = 30000capital_reserves = 2400
    1. 01Annual cash flow: $42,000 - $30,000 - $2,400 = $9,600
    2. 02Monthly cash flow: $9,600 / 12 = $800
    3. 03Cash flow margin: $9,600 / $42,000 x 100 = 22.9%

    Ready to run the numbers?

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