Is cash flow the same as profit?

It is pre-tax operating cash profit, before income tax and before one-off capital costs. It excludes the principal portion of the mortgage being converted into equity.

How much maintenance should I reserve?

Common rules of thumb exist, but honest budgeting looks at the property's age, systems and your local trade costs. Whatever number you choose, tracking actuals beats estimates.

Why does management apply to collected rent?

Managers are typically paid a percentage of rent actually collected, when the unit sits empty, there is no fee. That is why the fee applies to effective income here.

Rental & Investment · Formula v1.0.0

Rental Cash Flow Calculator

Month-by-month reality check: effective income after vacancy, operating costs, and the cash flow left after the mortgage.

Currency (display only)

Your inputs

Monthly rental income

Vacancy allowance

Share of time you expect the unit empty.

Other operating expenses (monthly)(optional)

Taxes, insurance, utilities, HOA.

Property management fee(optional)

% of collected rent charged by a manager. Use 0 if self-managing.

Maintenance reserve (monthly)(optional)

Debt service

Mortgage payment (monthly P&I)(optional)

Other recurring expenses(optional)

e.g. loan-related insurance, ground rent.

Monthly cash flow

$507.60

$6,091.20 per year

Gross monthly rent: $2,400
Vacancy allowance: -$120.00 (5.0%)
Effective monthly income: $2,280.00
Operating expenses (excl. mortgage)Other opex $320 · management $182.40 · maintenance $120: -$622.40
Net operating income (monthly): $1,657.60
Debt service (monthly)Mortgage payments kept separate from operating expenses: -$1,150.00
Monthly cash flow: $507.60
Annual cash flow: $6,091.20

How the Rental Cash Flow works

Cash flow is the money left in your account each month after the property pays all of its own bills: vacancy drag, operating expenses, management, maintenance, and finally the mortgage.

The order matters. Start with scheduled rent, discount it for vacancy to get effective income, subtract operating expenses to reach monthly NOI, then subtract debt service to reach cash flow.

Keeping operating expenses and debt service separate lets you see both the property's standalone performance (NOI) and the effect of your financing decision (cash flow).

Formula & terms

Effective Income = Rent × (1 − Vacancy%) · Monthly Cash Flow = Effective Income − Operating Expenses − Debt Service

Effective income: Rent you actually collect after vacancy.

Debt service: Regular loan payments (principal + interest), excluded from operating expenses.

Worked example

Rent $2,400 with 5% vacancy collects $2,280 effective income. Management at 8% costs $182.40; other opex $320 and maintenance $120 bring operating expenses to $622.40.

Monthly NOI = 2,280 − 622.40 = $1,657.60. With a $1,150 mortgage payment, monthly cash flow = $507.60, about $6,091/year.

Remove the mortgage and the same unit's NOI shows the unleveraged view: $19,891/year.

Assumptions & limitations

•Monthly steady-state model; no seasonality, capex schedule, or tax effects.
•Vacancy and maintenance are assumptions, sensitivity matters more than precision.

Formula reference

Effective Income = Rent × (1 − Vacancy%) · Monthly Cash Flow = Effective Income − Operating Expenses − Debt Service

Effective income, Rent you actually collect after vacancy.
Debt service, Regular loan payments (principal + interest), excluded from operating expenses.

Keep learning

Related glossary terms

cash flow vacancy rate noi debt service