What is monthly cash flow?
Monthly cash flow is the money left after collecting rent and paying every property expense — mortgage principal and interest (P&I), property taxes, insurance, HOA fees, vacancy allowance, maintenance, and property management. A positive cash flow means the property generates income each month. A negative cash flow means you are writing a check every month to keep the property — fine in an appreciation market, but a risk if rents drop or vacancies rise.
Cap rate measures pre-financing yield and ignores your mortgage entirely. Cash flow is the number that actually hits your bank account after the lender takes its cut. For investors who use leverage (most do), cash flow is the more operationally relevant metric.
PITI: what goes into your monthly payment
PITI stands for Principal, Interest, Taxes, and Insurance. It is the true monthly cost of owning a mortgaged property before operating expenses. Most lenders qualify rental borrowers on DSCR (see below) using PITI as the denominator.
- Principal + Interest (P&I) — the amortizing mortgage payment. Fixed for a 30-year loan; recalculated each period for ARMs.
- Property taxes — typically 0.5–2.5% of assessed value annually, paid monthly via escrow. Rates vary enormously by state and county.
- Insurance — landlord (dwelling fire) policy, roughly $800–$2,000/year for a single-family. Flood and earthquake are separate.
- HOA (if applicable) — monthly assessment for condos and planned communities. Often $200–$800/month; can be the deal-killer on tight cash flow.
Cash-on-cash return vs cap rate
Cap rate = NOI ÷ purchase price. It ignores financing and is useful for comparing properties on a level playing field regardless of how they are bought.
Cash-on-cash return (CoC) = annual cash flow ÷ cash invested (your down payment). It measures what your actual dollars earn after the bank takes its share. Leverage amplifies CoC: a 5% cap-rate property with 20% down and a 7% mortgage can still produce a 12% CoC return when rents are strong.
When CoC is displayed as “N/A” in this calculator, it means you entered 0% down — an all-cash purchase. CoC is undefined in that case because the denominator (cash invested) is zero. The cap rate calculator is the better tool for all-cash comparison.
Estimating vacancy and expenses
The 35% expense ratio in Simple mode is a conservative all-in estimate for a newer, professionally managed single-family home. It covers vacancy, maintenance, and property management but excludes fixed-dollar costs (taxes, insurance, HOA). Use Advanced mode to itemize those.
Market-specific vacancy benchmarks:
- Tight urban markets (NYC, SF, Boston): 2–4% vacancy, strong tenant demand but high fixed costs.
- Suburban Midwest / Southeast: 5–8% vacancy is a reasonable baseline for single-family.
- Rural or tertiary markets: budget 10–15% vacancy; tenant pools are thinner and turn-time is longer.
- Maintenance: 5–8% of rent for homes under 15 years old; 10–15% for older or Class C properties.
DSCR: why lenders care
Debt Service Coverage Ratio (DSCR) = net operating income ÷ annual debt service. A DSCR of 1.0 means the property just barely covers the mortgage. Most DSCR lenders require 1.20–1.25 minimum — they want a 20–25% cushion above the break-even point. Below 1.0 means you must cover the shortfall from other income.
DSCR loans (also called “investor cash-flow loans”) qualify you on the property's income, not your personal W-2. They are popular with landlords who have maxed out conventional loan limits or whose self-employment income is hard to document.
Flip calculator: how it works
The flip tab calculates net profit and return-on-investment for a fix-and-flip. Holding cost is estimated as purchase price × annual financing rate × holding months — capturing the carry cost of a hard money or private money loan during rehab and sale.
Annualized ROI normalizes returns across different hold periods. A deal that earns 15% ROI in 4 months outperforms one that earns 18% ROI in 12 months (annualized: 57% vs 18%). Compare deals on annualized ROI when deciding where to deploy capital.
This calculator captures the primary costs (acquisition, rehab, financing carry, selling costs). Budget separately for utilities, landscaping, staging, and property insurance during the hold.
Cash flow FAQ
- What is monthly cash flow on a rental property?
- Monthly cash flow is the money left over after collecting rent and paying all expenses, including the mortgage (P&I), property taxes, insurance, HOA, maintenance, and property management fees. A positive cash flow means the property earns more than it costs each month; a negative cash flow means you are subsidizing it from your own pocket.
- What is a good cash-on-cash return for a rental?
- Most investors target 6–12% cash-on-cash (CoC) return. Markets with strong appreciation potential often produce lower CoC returns (2–5%) because buyers accept thinner cash flow in exchange for price growth. Cash flow markets in the Midwest and Southeast often yield 8–12%. Below 4% CoC is generally considered appreciation-dependent and carries financing risk if rents decline.
- What does DSCR mean and why do lenders care?
- Debt Service Coverage Ratio (DSCR) compares the property's net operating income to its monthly mortgage payment. A DSCR of 1.0 means the property exactly covers its debt; 1.25 means income is 25% above the debt payment. Most DSCR lenders require 1.20–1.25 minimum. A ratio below 1.0 means you need out-of-pocket funds to cover the mortgage — lenders see this as high risk.
- What is the difference between cap rate and cash-on-cash return?
- Cap rate measures pre-financing yield — it ignores your mortgage entirely, making it useful for comparing properties on equal footing regardless of how they are financed. Cash-on-cash return measures post-financing yield on the actual dollars you invested (your down payment). If you pay all cash, CoC and cap rate are nearly identical. Add financing and CoC rises above cap rate when you benefit from leverage — and falls below (or turns negative) when financing costs are high relative to income.
- How do I estimate vacancy and maintenance costs?
- A common starting point is 5–8% vacancy (1–2 weeks of empty time per year) and 5–10% of rent for maintenance. Single-family homes typically run lower vacancy but higher maintenance per unit; multifamily is the reverse. Class C properties in older neighborhoods should budget 10–15% for maintenance. The simple-mode expense slider in this calculator defaults to 35%, which is a conservative all-in expense estimate for a well-maintained property.
- How is this flip ROI different from a traditional ROI?
- This calculator measures total return on your all-in cost (purchase + rehab + holding cost), then annualizes it for an apples-to-apples comparison with other investments held for different durations. A flip that earns 20% profit in 4 months produces an annualized ROI of about 82% — far more useful than the headline 20% when comparing to a deal with the same margin but a 12-month hold.
- What selling costs should I include?
- Typical selling costs are 6–8%: real estate commissions (2.5–3% buyer's agent + 2.5–3% listing agent), title and escrow fees (~1%), and transfer taxes (varies by state). High-price markets may allow negotiating commissions down; budget conservatively until you have a firm sale structure.
- What is holding cost and how is it calculated?
- Holding cost is the interest you pay on money borrowed to fund the acquisition during the rehab and sale period. This calculator estimates it as: purchase price × annual financing rate × (holding months ÷ 12). Hard money lenders typically charge 8–12% per year; private money can range from 6–10%. Do not forget to add utility bills, insurance, and property taxes to your budget — this calculator captures the financing cost only.
Want a complete deal analysis beyond just cash flow? Cylier delivers AI-powered investment analysis for any US address — ARV estimates, rent comps, neighborhood class, and full financing modeling in seconds.