Cash Flow Calculator (Real Estate)

Last updated July 2, 2026

Rental property cash flow is the number that determines whether a real estate investment is financially self-sustaining — whether it puts money in your pocket each month or requires ongoing cash contributions to remain operational. The calculation is straightforward: monthly rental income minus all monthly expenses including mortgage payment, property taxes, insurance, property management fees, maintenance reserve, and vacancy allowance. The vacancy allowance — typically 5 to 8 percent of gross rent — is the one most commonly omitted by new investors, turning projected positive cash flow into actual negative cash flow when units sit vacant between tenants.

The 50 percent rule offers a quick cash flow screening heuristic: expect total operating expenses (excluding mortgage) to average approximately 50 percent of gross rent over a multi-year hold. A property generating $2,000 per month in rent should be budgeted for $1,000 in annual operating expenses, leaving $1,000 to service debt and produce cash flow. If the monthly mortgage payment exceeds $1,000, the property is cash flow neutral or negative. This rule works reasonably well across most residential rental types, though higher-quality properties in stable markets often run below 50 percent expenses, and older properties or those requiring active management may run above it. Properties that cannot produce positive cash flow after a realistic expense estimate require an appreciation or market-timing thesis to justify ownership, which introduces substantially more investment risk.

The calculation shows real estate cash flow using all actual expenses — including vacancy allowance, maintenance reserve, and property management — not just the mortgage and insurance. The 50 percent rule provides a quick screen: if half of gross rent doesn't cover the mortgage with money left over, the deal is unlikely to produce positive cash flow under realistic conditions. Verify the vacancy rate using local market data, not the seller's proforma.