Calculate Your Monthly and Annual Cash Flow With These Easy-to-Use Calculators
If you're a real estate investor, understanding your monthly cash flow is essential. This is particularly the case if you’re relying on an investment property as a major source of income, or if you’ve brought outside investors into your deal, such as in the case of commercial or multifamily real estate syndications.
In this article, we’ll review the top 5 real estate investment property cash flow calculators online, looking at the pros and cons of each and how you can use them to better understand your property’s cash flow and other essential real estate profitability metrics, like IRR (internal rate of return) and cash-on-cash return over a specific investment period.
BiggerPockets
BiggerPockets is one of the most popular real estate investment communities on the internet. According to their website, their rental property cash flow calculator helps investors:
Determine the profitability of a potential rental property
Estimate potential monthly and annual cash flow
Generate printable PDFs to show lenders or outside investors
Calculate return on investment (ROI) over a specific time
Plan for unexpected expenses and costs
The BiggerPockets cash flow calculator is appropriate for single-family homes, duplexes, triplexes, quadplexes, and apartment buildings. It helps calculate cash flow by determining residual income after property operational and financing costs including lease-up costs, utilities, property maintenance, and mortgage expenses.
In addition to providing a traditional real estate cash flow calculator, they also provide a variety of other real estate investment calculators, including a mortgage calculator, a BRRR (buy, rent, rehab, refinance) calculator, an Airbnb calculator, a 70% rule calculator, a fix and flip calculator, a wholesaling calculator, and a rehab estimator calculator.
Master Passive Income
Master Passive Income is a website dedicated to helping users create businesses and purchase investment properties to create passive income. Their Multifamily Property Cash Flow Investment Calculator is specifically intended to calculate cash flow from multifamily and apartment properties, though it can also be used for single-family and 2-4 unit rental properties.
Their calculator inputs include:
Asking price
Number of units
Price per door
Rent per door
Closing costs
Yearly expenses
The main benefit of Massive Passive Income’s calculator is its high level of detail. For example, their closing costs inputs include appraisal costs, lender and title fees, prepaid insurance, escrowed taxes, escrowed insurance, and inspections. They also include a section for out-of-pocket costs and yearly expenses, including accounting/legal, advertising, replacement reserves, utilities, property insurance, management fees, payroll, real estate taxes, repairs, security, trash removal, and supplies.
Using these inputs, the calculator estimates metrics including:
Cap rate
Unrealized capital gains
Return on capital gains
Cash-on-cash return
XelPlus
XelPlus’s rental property ROI and cash flow calculator can be accessed in Google Sheets or Excel, which gives users much more latitude to edit the calculator and modify it to their own needs. Their site also teaches you how to build your own calculator on Excel or Google Sheets. This is often a great idea for people new to real estate modeling, as it gives a potential investor hands-on experience at crunching the numbers, rather than simply relying on a pre-set model.
The main inputs for XelPlus’s rental property calculator include:
Initial investment purchase price and closing costs
Monthly debt service, factoring in loan term and rate
Monthly revenue, including potential amenities
Monthly expenses, including maintenance, taxes, and insurance
Monthly cash flow, factoring in debt service
Cash-on-cash Return (full mortgage)
ROI (without principal pay-down)
The downside of this calculator is that it isn’t quite the best for multifamily investments, as it doesn’t contain fields for the number of units, as well as for the different prices of different unit types.
FinancialMentor
FinancialMentor’s real estate calculator is an excellent choice to calculate the financials for both single-family and multifamily properties, as well as other types of commercial real estate. Unlike some of the calculators listed, it provides a long list of financial metrics. These include:
Cap rate
Cash-on-cash return
Gross rent multiplier
Net income multiplier
Expense ratio (per unit)
Property value based on required cap rate
Property value based on a required cap rate is an interesting and important metric that most other calculators don’t automatically calculate. Many investors use cap rate requirements as a core element of their underwriting process, so it’s nice to have a calculator that does this for you.
Arbor Real Estate IRR and Cash Flow Calculator
Arbor is one of the most active and most respective real estate lenders in the industry today, having been named a top Fannie Mae DUS lender for 14 years in a row, and having also ranked as a top Freddie Mac SBL lender in 2019. They offer a variety of easy-to-use tools, including their IRR and Cash Flow Calculator In this calculator, you can enter inputs including:
Amount invested
Years held
IRR
Cash flow from operations (and when cash flow starts)
The average annual cash-on-cash return
Unlike some of the other calculators on this list, this calculator should not be used in isolation, and generally needs to be used in concert with a commercial mortgage calculator, which Arbor also conveniently provides. The main benefit of this calculator is that you can manipulate any single input and the calculator will change the other inputs automatically.
Hence, if you are looking for an investment with a specific IRR, you can enter your target IRR and see the other fields of the calculator populate automatically. As you change other inputs, your IRR will also change automatically, For example, a prospective property that begins generating cash flow in year one (all other factors being held even), will have a higher IRR than a property that begins generating cash flow in year three, even if the overall cash flow generated is the same over the life of the investment holding period.
Other Resources and Calculator Lists:
Other resources for investors include:
IQ Calculator’s list of 8 powerful real estate investment calculators, including calculators that focus on metrics such as NPV and IRR.
Adventures in CRE’s library of real estate Excel models including hotel development, construction, and land development modes.
PropertyMetrics’ IRR Calculator is another great tool, as it provides both an easy browser plug-and-play version and a more detailed
Pensford’s defeasance calculator is ideal to calculate potential prepayment penalties for loans that may require defeasance as a prepayment penalty, such as CMBS loans.
Real Estate Calculators vs. Modeling and Underwriting
In the end, using a plug-and-play real estate investment calculator to calculate potential IRR or cash flow is a great way to determine the viability of an investment on the fly. However, if you truly want to evaluate an investment in detail, you should use a more complex underwriting model on Excel or a bespoke program like Argus.
This way, you will be able to effectively factor in every single important category, including niche expenses like replacement reserves, insurance, third-party reporting fees not covered as part of your lender fee, state and local property tax rates, and other factors. Specific underwriting models can also help you calculate tax benefits, such as cost segregation, or mortgage interest tax deductions, as well as rent increases over time due to value-add renovations.
Using a more complex, professional underwriting model will also make it easier for you to calculate and record the potential performance of a real estate investment under a variety of market conditions. Professional investors will often create at least three market scenarios in order to better understand what could happen to their investment, even if disaster strikes. That way, you can be prepared for whatever happens. When it comes to real estate investing, modeling and underwriting is one of the best (and perhaps the only way) to control potential risks and maximize the profitability of your investment.
So, whether you get started underwriting your potential investments with an easy-to-use calculator or a complex spreadsheet, just get started!