Purpose and steps
Apply vacancy to rent and other income, subtract management, maintenance, tax, insurance, and HOA for NOI, then subtract the mortgage payment for cash flow. Cash-on-cash divides annual cash flow by down payment plus closing and initial repairs. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Property price, Down payment, Annual interest rate, Loan term, Closing costs, Initial repairs, Monthly rent, Monthly other income, Vacancy allowance, Management / collected income, Annual property tax, Annual insurance, Maintenance / gross rent, Monthly HOA dues. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: NOI is before mortgage payments; cash flow is after debt service.
- Compare the baseline with a changed scenario: DSCR above 1 means modeled NOI covers scheduled mortgage payments, but lender thresholds vary.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Property price | 300000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Down payment | 20 % | Check the unit carefully: some tools use a percentage and others a cash amount. |
| Annual interest rate | 6.75 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Loan term | 30 years | Use years here. The model converts to months when the payment schedule requires it. |
| Closing costs | 6000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Initial repairs | 4000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Monthly rent | 2400 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Monthly other income | 50 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Vacancy allowance | 5 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Management / collected income | 8 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Annual property tax | 3600 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Annual insurance | 1200 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Maintenance / gross rent | 6 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Monthly HOA dues | 0 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
Model-specific method
How this calculator produces its result
Apply vacancy to rent and other income, subtract management, maintenance, tax, insurance, and HOA for NOI, then subtract the mortgage payment for cash flow. Cash-on-cash divides annual cash flow by down payment plus closing and initial repairs.
A cash-flow waterfall and scenario sensitivity
Income and costs form successive layers. Subtracting financing before computing NOI changes the definition and distorts cap-rate comparisons. Principal repayment uses cash but can also build equity, so a tax profit, operating profit and cash-flow result may legitimately differ.
Sensitivity analysis changes one assumption while keeping the others fixed. If yearly potential rent is G, a one-percentage-point vacancy increase directly reduces collected rent by G×0.01, before variable expense offsets. Combined stress scenarios are also important: vacancy, maintenance and borrowing costs can worsen together.
Effective income = potential income × (1 − vacancy) NOI = effective income − operating expenses Cash flow = NOI − debt service DSCR = NOI / debt service
- Potential income: before vacancy or collection loss
- NOI: net operating income before financing
- Debt service: contractual principal and interest payments
- Cash flow: money remaining after the modeled payments
Worked example
A $300,000 property with 20% down starts with a $240,000 loan. Adding $6,000 closing and $4,000 repairs makes cash invested $70,000 before reserves.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Estimated monthly rental cash flow
- 40.66 USD
- Monthly effective income
- 2,327.5 USD
- Monthly operating expenses
- 730.2 USD
- Monthly mortgage payment
- 1,556.64 USD
- Annual net operating income (NOI)
- 19,167.6 USD
- Annual cash flow
- 487.97 USD
- Cap rate
- 6.39%
- Cash-on-cash return
- 0.7%
- Debt-service coverage ratio
- 1.03
- Monthly rent / price
- 0.8%
- Initial cash invested
- 70,000 USD
Reading results without overstating them
- NOI is before mortgage payments; cash flow is after debt service.
- DSCR above 1 means modeled NOI covers scheduled mortgage payments, but lender thresholds vary.
Assumptions and exclusions
- Uses flat monthly income and costs and excludes reserves, utilities, legal/accounting fees, capital expenditures, income tax, depreciation, rent growth, and selling costs. Loan approval and local rules are outside the model.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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