A rental property can look profitable on a listing and still lose money every month. The gap is almost always the same: the listing counts the rent and the mortgage, and nothing else. This guide walks through the full cash flow calculation one step at a time, using one example property, so you can repeat the same steps with your own numbers in the calculator.
Scheduled rent is the full monthly rent the unit is supposed to bring in if it is occupied and the tenant pays on time. Use a realistic figure, based on similar units currently rented near you, not on the highest listing you can find. In our example the rent is $1,800 a month. Because we will budget for vacancy separately, do not subtract vacancy from this number yourself; doing both counts it twice.
PITI means principal, interest, taxes, and insurance. The Consumer Financial Protection Bureau explains it as the pieces that usually make up a monthly mortgage payment when taxes and insurance are collected through escrow. Use the whole payment from your loan estimate or mortgage statement. In our example the PITI is $1,240 a month. If you pay property taxes and insurance outside the loan, add their monthly cost to this field or to the "other" field, but only once.
Three costs are real over a long ownership period but rarely arrive as a neat monthly bill, so the calculator lets you budget them as a percentage of rent:
None of these percentages is an official standard. They are starting assumptions; replace them with quotes and local experience as soon as you have them.
Add anything that is not already inside PITI: HOA dues, utilities you pay as the owner, lawn or snow service, pest control, and so on. Our example uses $120 a month.
| Scheduled rent | $1,800 |
| Mortgage (PITI) | -$1,240 |
| Management (8%) | -$144 |
| Maintenance (6%) | -$108 |
| Vacancy (5%) | -$90 |
| Other expenses | -$120 |
| Estimated cash flow | $98 per month |
The total of costs is $1,702, so $1,800 minus $1,702 leaves $98 a month, or about $1,176 a year. A listing that only subtracted the mortgage would have shown $560 a month, more than five times as much.
A single number hides how fragile it can be. Change one input at a time and watch the result:
If a deal only works when everything goes right, it is a thin deal. Many investors decide in advance what monthly cushion they need and walk away from deals that cannot reach it; that threshold is personal, not a universal rule.
A positive result means that, on your assumptions, the property pays its own way each month before income taxes. It does not tell you the return on the cash you invested, because this calculator does not ask for your down payment or closing costs. It also does not include appreciation or the principal you repay on the loan. Our cash flow vs. profit guide explains how those pieces fit together.
Should I use the rent I hope for or the rent I have today? Use what comparable units are actually renting for. If a current lease exists, use it, and confirm it with the lease document rather than a seller's summary.
What if my result is negative? Treat it as information. Look at which input is doing the damage: price, interest rate, taxes, or rent. Sometimes a lower offer or a larger down payment changes the picture; sometimes the right answer is to skip the deal.
Do I redo this each year? Yes. Rent, taxes, insurance and repair needs all change, so refresh the inputs at least once a year.