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Rental cash flow calculator

By Jude Wallis

Rental cash flow is effective gross income minus operating expenses and debt service. At $2,400 monthly rent, 5 percent vacancy, $8,000 expenses and $1,450 monthly debt service, annual cash flow is $1,960.

Annual cash flow

$1,960.00

NOI $19,360.00 after $17,400.00 of debt service.

Scheduled rent
$28,800.00
NOI
$19,360.00
Cash flow
$1,960.00
$

Scheduled rent for one month.

Months in the year on this sheet. Teaching default is 12.

%

Share of scheduled rent not collected. 5 here means 5 percent.

$

Operating costs, not debt service.

$

Loan payment for one month.

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Cash-on-cash return

The formula

cash flow=EGI−operating expenses−debt service\text{cash flow}=\text{EGI}-\text{operating expenses}-\text{debt service}

Effective gross income, or EGI, is gross scheduled rent less vacancy. Subtract annual operating expenses and annual debt service.

Build effective gross income

$2,400 for 12 months is $28,800 gross rent. A 5 percent vacancy amount is $1,440, leaving $27,360 of effective gross income. How rental cash flow works explains the sequence.

Subtract operations and debt

Subtract $8,000 of operating expenses to get $19,360 of NOI. Twelve $1,450 debt payments total $17,400. Cash flow is $1,960.

A negative cash flow case

At $2,000 monthly rent, gross is $24,000, vacancy is $1,200, EGI is $22,800 and NOI is $14,800. After $17,400 debt service, cash flow is negative $2,600. How cash on cash return works scales annual cash flow by invested cash.

Scope of the result

This annual identity uses entered rent, vacancy, operating expenses and debt service. Tax, sale proceeds and property value changes are separate. This is educational material, not financial advice.

Worked examples

\$1,960 positive annual cash flow

Monthly rent is $2,400 for 12 months, vacancy is 5 percent, operating expenses are $8,000, and monthly debt service is $1,450. What is annual cash flow?

  1. Gross rent is 2400(12)=288002400(12)=28800, so $28,800. Vacancy is 28800(0.05)=144028800(0.05)=1440, so $1,440.
  2. EGI is 28800−1440=2736028800-1440=27360, so $27,360. NOI is 27360−8000=1936027360-8000=19360, so $19,360.
  3. Debt service is 1450(12)=174001450(12)=17400, so $17,400.
  4. Cash flow is 19360−17400=196019360-17400=1960, so $1,960.

At $2,400 monthly rent for 12 months, gross is $28,800, vacancy is $1,440, EGI is $27,360, NOI is $19,360, debt service is $17,400 and cash flow is $1,960.

\$2,600 negative annual cash flow

Monthly rent is $2,000 for 12 months, vacancy is 5 percent, operating expenses are $8,000, and monthly debt service is $1,450. What is annual cash flow?

  1. Gross rent is 2000(12)=240002000(12)=24000, so $24,000. Vacancy is 24000(0.05)=120024000(0.05)=1200, so $1,200.
  2. EGI is 24000−1200=2280024000-1200=22800, so $22,800. NOI is 22800−8000=1480022800-8000=14800, so $14,800.
  3. Debt service is 1450(12)=174001450(12)=17400, so $17,400.
  4. Cash flow is 14800−17400=−260014800-17400=-2600, or negative $2,600.

At $2,000 monthly rent for 12 months, gross is $24,000, vacancy is $1,200, EGI is $22,800, NOI is $14,800, debt service is $17,400 and cash flow is negative $2,600.

Stopping at NOI

NOI subtracts operating expenses but not debt service. Cash flow subtracts the annual $17,400 debt service after NOI in these examples.

Common questions

Is vacancy a cash payment?

Here it is an allowance subtracted from scheduled gross rent to form effective gross income.

Is NOI the final cash flow?

No. Debt service is subtracted after NOI.

Is this financial advice?

No. It is educational material for an annual rental cash flow identity.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.