Cash flow
Negative in this scenarioThe example produces negative before-tax cash flow because the mortgage payment is higher than NOI.
Field notes Property guide
Rental Property Cash Flow Example
A realistic rental cash-flow estimate starts with rent, then subtracts vacancy, operating costs and financing. This example shows how the pieces fit together.
Want the tool first? Open the Rental Property Calculator
Quick answer
User question: “If I buy this property and rent it out, what might the monthly cash flow look like before tax?” In this example, the entered rent does not cover estimated operating expenses and mortgage payments, so the before-tax cash flow is negative.
Primary calculator
Rental Property Calculator
Use the rental property calculator to enter your own rent, vacancy, expenses, mortgage and upfront-cash assumptions.
This guide does not use prefilled calculator links yet.
Example inputs
These are the assumptions used in the scenario.
- Purchase price and deposit Property price is 620,000 with a 20% deposit, leaving an estimated 496,000 loan.
- Mortgage assumption The scenario uses a 6.5% annual rate over 30 years with principal-and-interest repayments.
- Rent Expected rent is 650 per week, or about 2,817 per month before vacancy.
- Vacancy and management Vacancy is set to 5%, and property management is set to 8% of rent.
- Operating expenses Rates or property taxes, insurance, maintenance and reserves total about 650 per month.
- Purchase costs Closing or purchase costs are separate upfront cash assumptions, not monthly expenses.
Worked example
- Monthly rent before vacancy
- About 2,817
- 650 per week times 52, divided by 12.
- Vacancy allowance
- About 141
- 5% of monthly rent in this example.
- Operating expenses
- About 875
- Includes fixed expenses plus property management.
- Net operating income
- About 1,800 per month
- Rent after vacancy and operating expenses, before mortgage payments.
- Mortgage payment
- About 3,135 per month
- Estimated from the loan, rate and term assumptions.
- Cash flow before tax
- About -1,335 per month
- NOI minus estimated mortgage payment.
The numbers suggest this scenario would need either higher rent, lower costs, different financing or more cash in the deal to reach break-even before tax.
Result interpretation
Read the result as a scenario based on the assumptions entered, not as a decision rule.
Gross yield
About 5.5%Gross yield uses rent and purchase price before vacancy, expenses and financing.
Net yield before financing
Lower than gross yieldNet yield drops after vacancy and operating expenses are included.
Break-even rent
Worth checkingA break-even rent estimate can show how much rent would be needed to cover the entered costs.
Assumptions that change the result most
Before using the tool, gather the inputs or assumptions that are most likely to move the result.
- Interest rate A higher rate raises the mortgage payment and can dominate the monthly cash-flow result.
- Rent and vacancy A small weekly rent change becomes larger over a year, while vacancy reduces collected rent.
- Maintenance reserve Low maintenance assumptions can make the result look smoother than a real ownership year.
- Deposit size A larger deposit can reduce the mortgage payment but increases upfront cash in the deal.
Common mistakes
These are common ways an estimate can become cleaner than the real-world scenario.
- Stopping at gross yield Gross yield does not include vacancy, operating expenses or mortgage payments.
- Forgetting management fees If management is used, it normally moves with rent and should not be treated as a fixed zero cost.
- Underestimating repairs A low maintenance reserve can turn an estimate into a best-case scenario.
- Treating one month as typical Rental costs can be lumpy. The calculator smooths assumptions into a planning estimate.
Related calculators
Use these calculators for related rental and investor scenarios.
Rental Yield CalculatorEstimate rental yield, gross yield, net yield, capitalization rate, net operating income and simple rental cash flow from price, rent and expenses.Break-Even Rent CalculatorEstimate the gross monthly rent needed to cover mortgage payments, vacancy, property management and monthly rental property expenses.BRRRR CalculatorEstimate a BRRRR property scenario with purchase, rehab, ARV, rent, refinance LTV, costs, cash left in the deal, DSCR and monthly cash flow.
Related guides
Use these guides to understand the metrics behind the example.
Rental Property Analysis ExampleA worked rental property example showing cash flow, yield, break-even rent and the assumptions that move the result.Rental Yield, Cap Rate, Cash-on-Cash and DSCR ExplainedA concise glossary for rental yield, cap rate, cash-on-cash return, NOI, DSCR and break-even rent.
What to try next
Use the next step that matches the question you want to answer.
Run the full rental scenario Estimate pre-tax rental property cash flow, gross yield, net yield, cash-on-cash return and break-even rent. Open rental property calculator Find the break-even rent Estimate the gross monthly rent needed to cover mortgage payments, vacancy, property management and monthly rental property expenses. Open break-even rent calculator Review rental metrics A concise glossary for rental yield, cap rate, cash-on-cash return, NOI, DSCR and break-even rent. Read rental metrics guide Browse guides Return to the guide hub for related calculator examples. Open guides hub
FAQs
Is negative rental cash flow always bad?
This guide does not label a scenario good or bad. Negative cash flow means estimated monthly costs are higher than income under the assumptions entered.
Why does gross yield look better than cash flow?
Gross yield ignores vacancy, operating expenses and mortgage payments. Cash flow includes more of the monthly scenario.
Does this example include tax?
No. It is a before-tax example and does not model depreciation, deductions, local rules or personal tax settings.
Can I open the calculator with these values prefilled?
Not yet. The calculator link opens the standard calculator page. Prefilled examples can be added later if URL state is introduced.
Which assumption should I test first?
Interest rate, rent, vacancy and maintenance are usually useful first checks because they can strongly move the result.
Methodology and limits
This example is a general before-tax estimate only. It is not financial, tax, legal, accounting, mortgage or investment advice, and it does not include every local cost, repair event, lender rule or tenant outcome.
Read the methodology notes or the general disclaimer for broader NoNoiseTools assumptions.