Property Cash Flow Calculator Formula

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

Use the Property Cash Flow Calculator

Formulas Used

Monthly Cash Flow

monthly_cash_flow = monthly_cf

Annual Cash Flow

annual_cash_flow = monthly_cf * 12

Effective Monthly Income

effective_gross_income = effective_rent

Total Monthly Expenses

total_monthly_expenses = total_expenses

Expense Ratio

expense_ratio = effective_rent > 0 ? (total_expenses / effective_rent) * 100 : 0

Variables

VariableDescriptionDefault
monthly_rentMonthly Rental Income(USD)2800
vacancy_rateVacancy Rate(%)5
monthly_mortgageMonthly Mortgage Payment (P&I)(USD)1400
monthly_taxesMonthly Property Taxes(USD)250
monthly_insuranceMonthly Insurance(USD)120
monthly_maintenanceMonthly Maintenance Reserve(USD)200
monthly_mgmt_feeMonthly Management Fee(USD)0
effective_rentDerived value= monthly_rent * (1 - vacancy_rate / 100)calculated
total_expensesDerived value= monthly_mortgage + monthly_taxes + monthly_insurance + monthly_maintenance + monthly_mgmt_feecalculated
monthly_cfDerived value= effective_rent - total_expensescalculated

How It Works

Property Cash Flow Analysis

Cash flow is the money remaining after all property expenses are paid from rental income. Positive cash flow means the property pays for itself and generates a profit.

Formula

Monthly Cash Flow = Effective Rental Income - Total Monthly Expenses

Where:

  • Effective Rental Income = Gross Rent x (1 - Vacancy Rate)
  • Total Expenses = Mortgage + Taxes + Insurance + Maintenance + Management

    • Why Cash Flow Matters

  • Positive cash flow protects against unexpected expenses
  • Negative cash flow means you subsidize the property each month
  • Most investors target at least $100-$200 per unit per month
  • Cash flow does not include equity buildup or appreciation, which are separate returns

    • Worked Example

    A rental property earns $2,800/month with 5% vacancy, $1,400 mortgage, $250 taxes, $120 insurance, $200 maintenance, and no management fee.

    monthly_rent = 2800vacancy_rate = 5monthly_mortgage = 1400monthly_taxes = 250monthly_insurance = 120monthly_maintenance = 200monthly_mgmt_fee = 0
    1. 01Effective monthly income: $2,800 x (1 - 0.05) = $2,660
    2. 02Total expenses: $1,400 + $250 + $120 + $200 + $0 = $1,970
    3. 03Monthly cash flow: $2,660 - $1,970 = $690
    4. 04Annual cash flow: $690 x 12 = $8,280
    5. 05Expense ratio: $1,970 / $2,660 = 74.1%

    Ready to run the numbers?

    Open Property Cash Flow Calculator