Learn · Guides · Last reviewed 2026-10-17
How rental cash flow is estimated
How this site turns rent, vacancy, operating expenses, and a fixed-rate loan into monthly cash flow.
Site editorial notes. Written to explain how this site’s calculators work. Not a review by a licensed mortgage professional, and not a recommendation to borrow.
Cash flow starts with the rent you type
Gross rent is the monthly rent plus any other income you enter. Vacancy is a percent of that gross rent. Effective rent is what remains. The calculator does not look up a market rent or a vacancy study. Both numbers are assumptions.
Operating expenses are the property tax, insurance, HOA, maintenance, management, reserve, and other costs you enter. Maintenance and the reserve are percents of gross rent. Management is a percent of effective rent. Tax can be a yearly dollar amount or a percent of the purchase price.
The loan payment is separate
Principal and interest use the same fixed monthly schedule as the mortgage calculator. Interest for a month is the unpaid balance times the rate divided by 12, rounded to the cent. Taxes and insurance stay in the operating expenses. They are not added to the loan payment a second time.
Mortgage insurance is not estimated. If a lender would charge it, you can type that amount as an other monthly cost. Leaving it out does not mean a lender will waive it.
Cap rate and cash-on-cash answer different questions
Net operating income is effective rent minus operating expenses, before the loan. Cap rate divides the annual net operating income by the purchase price. Cash flow then subtracts principal and interest. Cash-on-cash divides annual cash flow by the down payment plus the closing cash you entered. That closing cash is not added to the loan.
A longer term can raise monthly cash flow and also raise total interest. The figures in the example on this page come from the calculator’s default scenario. They are not a valuation, and they leave out income tax, depreciation, and any change in the property’s value.
Needs review before launch. Income-tax treatment of rent, depreciation, and mortgage interest is not calculated.
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Written to explain how this site’s calculators work. Not a review by a licensed mortgage professional, and not a recommendation to borrow. These notes are not financial, tax, or legal advice.