Rental Property Cash Flow: Complete Calculation Example

The property

A $175,000 rental, 25% down ($43,750), financed at 7% over 30 years, renting for $1,650/month, with $1,100/year insurance, a 1.1% property tax rate, and $600/year HOA dues.

Line by line

• Mortgage (P&I): $873/month on the $131,250 loan.
• Property taxes: $160/month (1.1% of $175,000, annualized).
• Insurance: $92/month ($1,100/year).
• HOA: $50/month ($600/year).
• Vacancy reserve: $83/month (5% of rent) — budgeted even in a good year, since turnover eventually happens.
• Property management: $132/month (8% of rent) — included even if you plan to self-manage, so the numbers are comparable to a deal you wouldn't manage yourself.
• Repairs & maintenance: $83/month (5% of rent).
• CapEx reserve: $83/month (5% of rent) — set aside for the roof, HVAC, and water heater that will eventually need replacing.

Total monthly expenses: $1,555. Against $1,650 in rent, that leaves $95/month — $1,142/year — in cash flow. Against the $43,750 down payment, that's a Cash-on-Cash Return of roughly 2.6%.

Why this example matters

$95/month looks thin, and it is — this is a deliberately tight example to show what happens when every real cost is actually included. A lot of quick mental math on a rental skips vacancy, skips property management (especially when self-managing), and skips CapEx reserves entirely, which can make the same property look like it cash flows $300-400/month instead of $95. That gap is exactly where deals that looked fine on a napkin turn into break-even or negative once the first vacancy or repair actually happens.

What would improve this deal

From here, the calculator makes it easy to see what actually moves the needle: a lower purchase price, a larger down payment (trading Cash-on-Cash Return for lower risk), a lower interest rate, or higher achievable rent all directly increase monthly cash flow. See how vacancy specifically changes the return for one of the more underestimated variables.

Plug your own numbers into the Rental Property Calculator to see the full breakdown, including Cap Rate and Net Operating Income, for a specific property you're considering.