What is rental property cash flow?
Rental property cash flow is the money left after rental income, other income, vacancy, operating expenses, and debt service are considered.
Formula
Monthly Cash Flow = Effective Monthly Income - Monthly Operating Expenses - Monthly Debt Service
Cash flow example
Using the default values shown in the calculator, scheduled rent of $2,400 plus $100 of other income is reduced by a 6% vacancy allowance on scheduled rent to $2,356 of effective monthly income. Estimated monthly operating expenses are $1,302, monthly NOI is $1,054, and $1,200 of monthly debt service produces estimated monthly cash flow of about -$146.
How It Works
- Start with scheduled rent and other monthly income.
- Subtract the vacancy allowance to calculate effective monthly income.
- Convert annual operating expenses into monthly amounts and subtract them to calculate NOI.
- Subtract monthly debt service to estimate monthly cash flow.
Vacancy Allowance = Scheduled Monthly Rent x Vacancy Rate
Effective Monthly Income = Scheduled Rent + Other Income - Vacancy Allowance
Monthly NOI = Effective Monthly Income - Monthly Operating Expenses
Monthly Cash Flow = Monthly NOI - Monthly Debt Service
Annual Cash Flow = Monthly Cash Flow x 12
Why It Is Important
- Cash flow shows whether a rental property is producing spendable money after recurring costs.
- Expense tracking quality directly affects whether the number is useful.
- PropioLedger separates property expenses from rental ledger balances so cashflow reporting stays clean.
Important Limits
This calculator is for planning and education. It does not replace accounting, tax, lending, legal, appraisal, or investment advice. Actual performance depends on rent collection, lease terms, repairs, vacancy, financing, taxes, insurance, local market conditions, and the quality of your source records.
Rental Property Cash Flow Example
Here is a complete worked example using fictional property data for Oak Street Duplex.
- Under these assumptions, the property produces an estimated $435 in monthly cash flow before income taxes and major unplanned capital expenditures.
- Actual results may differ from the estimate.
| Input | Amount |
|---|---|
| Scheduled monthly rent | $3,300 |
| Other monthly income | $100 |
| Vacancy allowance | 5% |
| Property taxes per year | $6,600 |
| Insurance per year | $2,520 |
| HOA fees per year | $0 |
| Property management fee | 0% |
| Maintenance and repairs per year | $3,300 |
| Utilities per year | $1,500 |
| Other operating expenses per year | $1,080 |
| Monthly debt service | $1,550 |
Vacancy Allowance = $3,300 x 5% = $165
Effective Monthly Income = $3,300 + $100 - $165 = $3,235
Monthly Operating Expenses = $550 property taxes + $210 insurance + $275 maintenance and repairs + $125 utilities + $90 other operating expenses = $1,250
Monthly NOI = $3,235 - $1,250 = $1,985
Monthly Cash Flow = $1,985 - $1,550 = $435
Annual Cash Flow = $435 x 12 = $5,220
Cash Flow vs. Net Operating Income
Net operating income measures property performance before financing. Cash flow measures the cash remaining after operating expenses and debt service. A property can produce positive NOI but negative cash flow when financing costs are high.
| Metric | Operating Expenses Included? | Debt Service Included? |
|---|---|---|
| Net operating income | Yes | No |
| Cash flow | Yes | Yes |
Related Guides
Cash Flow vs. Profitability GuideWhat Expenses Should Be Included?
This calculator includes common recurring operating expenses: property taxes, insurance, HOA fees, property management, maintenance and repairs, utilities, and other recurring operating expenses.
Commonly overlooked costs can go into Other operating expenses when they apply, including landscaping, pest control, licensing, advertising, bookkeeping software, bank fees, and leasing expenses.
Why Include a Vacancy Allowance?
Using scheduled rent without accounting for vacancy can overstate expected cash flow. A vacancy allowance can reflect time between tenants, nonpayment, concessions, delayed lease starts, or partial-month occupancy.
Use local history and property-specific experience when available rather than relying on one universal percentage.
Related Guides
Occupancy Rate CalculatorEstimated vs. Actual Rental Property Cash Flow
A calculator estimates performance using assumptions. Actual cash flow depends on rent collected and expenses paid. Comparing the original estimate with actual results can reveal whether vacancy, maintenance, insurance, taxes, or other costs are different from expectations.
PropioLedger helps landlords record actual income and expenses by property and review monthly cash flow after ownership.
| Category | Estimated | Actual |
|---|---|---|
| Effective income | $3,235 | $3,135 |
| Operating expenses | $1,250 | $1,430 |
| Debt service | $1,550 | $1,550 |
| Monthly cash flow | $435 | $155 |
Track Actual Cash Flow After You Buy
This calculator helps estimate how a property may perform. PropioLedger helps landlords organize actual income and expenses by property, monitor monthly cash flow, and compare performance across a rental portfolio.
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