What is rental property cash flow?
Cash flow is rent minus operating expenses minus the mortgage payment — the cash that lands in your account each month. It's the most intuitive number in rental investing and also the most commonly faked: listings, back-of-napkin math, and optimistic spreadsheets routinely skip the expenses that turn a “$500/mo winner” into a break-even deal. This calculator includes all of them by default.
The formula
Two of those three terms are where deals are won or lost. Rent is usually knowable. The mortgage payment is exact math. But “operating expenses” is a bundle of eight or more line items — and every one you skip inflates the answer.
The full walkthrough, line by line
Here's the calculator's default example worked out by hand — a $250,000 single-family rental at $2,400/mo rent, bought with 20% down at 6.75% on a 30-year loan:
| Line item | Assumption | Monthly |
|---|---|---|
| Rent | Market rent | +$2,400 |
| Property tax | 1.1% of price / yr | −$229 |
| Insurance | 0.5% of price / yr | −$104 |
| Vacancy reserve | 5% of rent | −$120 |
| Management | 8% of rent | −$192 |
| Maintenance reserve | 10% of rent | −$240 |
| CapEx reserve | 5% of rent | −$120 |
| Mortgage (P&I) | $200k loan · 6.75% · 30yr | −$1,297 |
| Monthly cash flow | ≈ $97 |
Notice what the honest version of this deal looks like: roughly $97/mo, not the $770/mo you'd get by computing “rent minus tax, insurance, and mortgage” the way many listings do. That gap — about $670 of reserves — isn't pessimism. It's the vacancy month, the water heater, and the property manager that every rental eventually pays for, averaged into a monthly number.
The assumptions also show how sensitive the answer is. Drop the maintenance reserve to 5% for a newer build and cash flow roughly doubles to ~$217/mo. Self-manage and it jumps another $192. That's why serious investors argue about expense assumptions, not formulas — the formula is trivial, the assumptions are the underwrite.
The NOI / debt-service split
Under the headline number, the calculator shows the split lenders care about. Net Operating Income is rent minus operating expenses, before the mortgage — $1,515/mo in the example above. DSCR divides that NOI by the debt service: $1,515 ÷ $1,297 = 1.17. Lenders typically want ≥1.25 for investment loans, so this deal cash-flows for you but sits below the threshold many lenders underwrite to — exactly the kind of nuance a single cash-flow number hides.
One convention worth knowing: following the lender-standard definition, NOI and DSCR here exclude the CapEx reserve (it's a return-of-capital reserve, not an operating expense), while cash flow still subtracts it. The full TrueCap analyzer uses the same convention, so the numbers you see here carry over exactly.
What's good monthly cash flow?
There's no universal magic number — $300/mo means something different on a $120k door in Cleveland than on a $600k door in Phoenix. But the bands TrueCap's own verdict engine uses are a useful reference:
| Monthly cash flow | Read |
|---|---|
| $400+ | Strong — when DSCR ≥ 1.25 and cash-on-cash ≥ 10% agree |
| $100–$400 | Solid — real cushion, worth the full underwrite |
| $0–$100 | Break-even territory — one repair erases the year |
| $0 to −$200 | Marginal — you subsidize the property monthly |
| Below −$200 | Negative — the numbers don't support a buy-and-hold thesis as entered |
Two caveats. First, cash flow scales with deal size — judge it alongside cash-on-cash return (most buy-and-hold investors target 8–12%) so a big deal can't hide a weak return behind a big-looking dollar figure. Second, a strong cash-flow number built on thin reserves is fiction. $400/mo with 0% vacancy and 0% maintenance is worse than $150/mo with honest assumptions.
The costs beginners forget
1. CapEx — the roof fund
Capital expenditures are the big-ticket items that don't show up monthly but absolutely show up: roof, HVAC, water heater, flooring. A common reserve is 5–10% of rent, more for older properties. Skipping CapEx is the single most common way spreadsheets overstate cash flow — our guide to CapEx and maintenance reserves breaks down realistic numbers by property age.
2. Vacancy — rent you don't collect
No property rents 12 months a year forever. A 5–8% vacancy reserve models roughly 2–4 weeks of vacancy per year plus collection loss. In high-turnover neighborhoods or college towns, use more.
3. Turns — the cost between tenants
Every move-out costs money: paint, cleaning, small repairs, re-leasing fees, and the vacant weeks while it happens. Turns land across your vacancy and maintenance reserves — which is exactly why zeroing those lines out because “the tenant is great” eventually produces a very bad quarter.
4. PMI on low-down-payment loans
Under 20% down, most conventional loans add monthly mortgage insurance on top of P&I. This calculator flags it; the full analyzer models it automatically, including when it drops off as the loan amortizes.
Cash flow vs. cap rate vs. cash-on-cash
These three metrics answer different questions, and serious investors read them together:
- Cash flow — What lands in my account each month? Absolute dollars; includes financing.
- Cap rate — How does the property perform as an asset, ignoring financing? Best for comparing properties. Run it with the cap rate calculator.
- Cash-on-cash return — How hard is my invested cash working, as a percentage? Best for comparing against other uses of your money. Run it with the cash-on-cash calculator.
Cash flow is the one that pays your bills — but it's also the one that says nothing about scale. The percentage metrics keep it honest, and DSCR tells you whether a lender will fund the deal at all. For how the whole family of metrics fits together on a real deal, see cap rate vs cash-on-cash vs DSCR and the strategy-level view in cash flow vs appreciation.
When to use this calculator
Use it the moment a listing catches your eye. Cash flow with honest reserves is the fastest way to sort “worth a real underwrite” from “pass” — faster and more accurate than the 50% rule once you have real numbers for tax and insurance.
When a deal survives this screen, run the full analysis at TrueCap — the analyzer starts from the same inputs, adds PMI, closing costs, and after-tax effects, and layers on cap rate, cash-on-cash, DSCR, 10-year projections, tax strategy, exit scenarios, and a plain-English verdict.
Frequently asked questions
How do you calculate cash flow on a rental property?+
Cash flow equals rent minus operating expenses minus the mortgage payment. Start with monthly rent, subtract every operating cost — property tax, insurance, vacancy reserve, management, maintenance, CapEx reserve, plus HOA and owner-paid utilities if they apply — then subtract the monthly principal-and-interest payment. What's left is the cash that actually lands in your account each month.
What is good monthly cash flow for a rental property?+
It depends on the deal size and how conservative your expense assumptions are. As a reference point, TrueCap's verdict engine weighs $400+/mo (paired with DSCR of at least 1.25 and cash-on-cash of at least 10%) as strong fundamentals, and $100+/mo as solid. Anything between $0 and $100/mo is break-even territory — one vacancy or repair wipes out the year. The number only means something if the expense reserves behind it are honest.
Does cash flow include the mortgage payment?+
Yes — that's the defining difference between cash flow and NOI. Net Operating Income stops before debt service, so it describes the property. Cash flow subtracts the mortgage payment too, so it describes your deal — the same property produces different cash flow for a 20%-down buyer and an all-cash buyer.
What's the difference between cash flow and NOI?+
NOI is gross rent minus operating expenses, before debt service and income tax. Cash flow keeps going: it subtracts the mortgage payment (and the CapEx reserve). TrueCap follows the lender-standard convention: NOI and DSCR exclude the CapEx reserve, because CapEx is a below-the-line return-of-capital reserve rather than an operating expense — but cash flow still subtracts it, because the roof fund is real money leaving your account.
Should I still budget for vacancy and maintenance if the property is new or I self-manage?+
Yes. Vacancy reserves typically run 5–8% of rent and maintenance 5–10% even on well-kept properties — tenants still move out and water heaters still fail. If you self-manage you can set management to 0%, but be honest that you're paying yourself with your own time. A calculator that skips these reserves produces a cash flow number the property will never actually deliver.
Is negative cash flow ever acceptable?+
Only as a deliberate, eyes-open appreciation bet in a market you have a specific reason to believe in — and only if you can comfortably feed the property every month without a forced sale risk. Negative cash flow removes your margin for error: a vacancy, a rate adjustment, or a repair bill compounds an already-losing month. Most 2026 underwriting weighs cash flow more heavily than boom-era underwriting did, precisely because appreciation is a forecast while cash flow is observable.
Why does my lender's DSCR look different from my cash flow?+
DSCR is NOI divided by debt service — it excludes the CapEx reserve and doesn't care about your down payment beyond how it sizes the loan. A deal can have positive cash flow but a DSCR below the 1.25 most lenders want, or vice versa. This calculator shows both so you can see the deal the way you'll experience it (cash flow) and the way a lender will underwrite it (DSCR).