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Calculator results are estimates for planning, not a loan approval, commitment, rate lock, or Loan Estimate.
What the investment property cash flow calculator calculates
This tool stress-tests a rental property's numbers before you buy: monthly cash flow (rent minus the mortgage payment and operating expenses), cap rate (net operating income against purchase price), cash-on-cash return (annual cash flow against your actual cash invested), and DSCR (debt service coverage ratio — how comfortably rent covers the mortgage payment).
Cash flow and DSCR are related but different: cash flow is a dollar amount after all expenses including the mortgage, while DSCR is a ratio measuring how many times over the rent covers the mortgage payment alone. Many rental-property and DSCR loan programs underwrite specifically to the DSCR ratio rather than your personal income.
The calculator applies a vacancy assumption to rent (since no rental sits 100% occupied forever) and factors in property taxes and insurance alongside the mortgage payment to estimate a realistic net operating income.
How to use it, step by step
- 1Enter the purchase price and your planned down payment for the property.
- 2Enter the expected monthly rent and a vacancy assumption — a conservative percentage (5-8% is common) rather than assuming full occupancy year-round.
- 3Enter estimated annual property taxes and insurance for the property.
- 4Enter an interest rate and loan term to test.
- 5Review estimated monthly cash flow, cap rate, cash-on-cash return, and DSCR, and adjust rent or price assumptions to see how sensitive the numbers are.
A worked example
Example inputs
- Purchase price
- $300,000
- Down payment
- 25% ($75,000)
- Expected monthly rent
- $2,200
- Vacancy assumption
- 6%
Result
Effective monthly rent after the 6% vacancy assumption is roughly $2,068. After the mortgage payment (on a $225,000 loan at an illustrative rate), property tax, and insurance, estimated monthly cash flow comes to roughly $180 in this example.
DSCR in this scenario — rent divided by the full mortgage payment — lands above 1.0, meaning rent more than covers the housing payment alone, which is the threshold many DSCR loan programs look for.
The example assumes a mid-range illustrative interest rate, not a current quote.
How to read the result
Positive monthly cash flow means the property covers its own costs and puts money in your pocket each month; negative cash flow means you'd be subsidizing the property from other income.
Cap rate lets you compare this property's return against other properties independent of financing — it's calculated on net operating income against price, without factoring in your specific loan terms.
DSCR of 1.00 or higher means rent covers the mortgage payment; many DSCR loan programs look for 1.00-1.20+ as a qualifying threshold, with stronger ratios generally unlocking better pricing.
Common mistakes
- Assuming 100% occupancy year-round instead of applying a realistic vacancy assumption — even good rentals typically see some turnover and vacancy between tenants.
- Forgetting maintenance, capital expenditures, and property management costs if you won't self-manage — these can turn a cash-flow-positive property on paper into a break-even or negative one in practice.
- Using optimistic rent estimates instead of verified comparable rents for the specific property and neighborhood.
- Confusing cap rate with cash-on-cash return — cap rate ignores financing entirely, while cash-on-cash return is specifically about the return on the cash you actually put in, including your down payment and closing costs.
Related guides
Frequently asked questions
It varies by market and investment goals, but many investors target somewhere in the 8-12% range as a reasonable benchmark, with some accepting lower returns for strong appreciation potential and others requiring higher returns in exchange for more risk.
Most DSCR programs look for a ratio of 1.00 or higher, meaning the property's rent at least covers the full mortgage payment. Stronger ratios, often 1.20 or higher, generally unlock better pricing and higher leverage.
A common planning range is 5-8% for stable rental markets, though high-turnover areas or seasonal markets may warrant a higher assumption. Check local rental market data for the specific area when you can, rather than relying on a generic percentage.
The core calculation focuses on rent, vacancy, the mortgage payment, taxes, and insurance. If you plan to use a property manager, factor their typical fee (often 8-12% of collected rent) into your expense assumptions separately for a more complete picture.
They answer different questions. Cap rate helps compare properties independent of financing; monthly cash flow tells you what actually lands in your account after your specific loan. Most investors look at both together rather than relying on just one.