Rental Income Calculator: Project Cash Flow
A rental income calculator helps you project how much money a rental property will actually put in your pocket each month. Gross rent is just the starting point — after vacancy, operating expenses, and mortgage payments, the real number is often very different from what you first expect. This guide walks through the income waterfall from gross rent to net cash flow, with formulas and a worked example.
The rental income waterfall
Rental income flows through several levels before reaching your bank account:
Gross Scheduled Income (all units at full rent, 12 months)
− Vacancy & Credit Loss
= Effective Gross Income
− Operating Expenses
= Net Operating Income (NOI)
− Debt Service (mortgage payments)
= Net Cash Flow (before taxes)
Gross scheduled income
This is the total rent you would collect if every unit were occupied every day of the year. For a single-family rental at $1,700/month, gross scheduled income is $20,400/year. Include other income sources: late fees, pet rent, parking, storage, or laundry.
To estimate achievable rent, research rental comparables — similar properties currently listed or recently rented in the same area. Use Zillow Rent Zestimate as a starting point, then verify with local listings on Apartments.com, Craigslist, or your property management company.
Vacancy and credit loss
No property achieves 100% occupancy forever. Budget for vacancy (time between tenants) and credit loss (non-paying tenants).
| Market Type | Typical Vacancy Rate |
|---|---|
| High-demand urban | 3-5% |
| Suburban / stable | 5-8% |
| Seasonal / college town | 8-12% |
| Rural / low-demand | 10-15% |
For most analyses, 7-8% is a reasonable default. Effective gross income = gross scheduled income × (1 − vacancy rate).
Operating expenses
Operating expenses are everything required to keep the property running, excluding mortgage payments:
- Property taxes — look up actual amount on the county tax assessor website
- Insurance — landlord/rental policy ($800-$2,000/year for SFR)
- Maintenance — routine repairs: plumbing, electrical, appliances, landscaping (5-10% of gross rent)
- Capital expenditures — major replacements: roof ($8-15K every 20-25 years), HVAC ($5-8K every 15-20 years), water heater ($1-2K every 10-15 years). Budget 5-8% of gross rent as reserves.
- Property management — 8-10% of gross rent if using a PM company, plus tenant placement fees (50-100% of first month's rent)
- HOA — if applicable
- Utilities — only if landlord-paid (water, sewer, trash in some markets)
The 50% rule: A quick screening tool — operating expenses for a rental property typically run about 50% of gross rent (not including mortgage). If rent is $1,700/month, expect ~$850/month in expenses. This is a rough estimate; always calculate the actual numbers for a serious analysis.
Worked example
Property: 3BR/2BA single-family, Houston TX
Monthly rent: $1,700
Gross scheduled income: $20,400/year
Vacancy (7%): −$1,428
Effective gross income: $18,972
Property taxes: −$4,200
Insurance: −$1,500
Maintenance (5%): −$1,020
Capex reserves (5%): −$1,020
Property management (8%): −$1,632
Total operating expenses: −$9,372
NOI: $9,600
Mortgage (25% down on $185,000, 7.0%, 30yr): −$11,076/year
Net cash flow: −$1,476/year (−$123/month)
This property is slightly negative cash flow with a PM company. Self-managing saves $1,632/year, pushing cash flow to +$156/year (+$13/month). Marginal either way — the real returns come from appreciation and equity buildup (see our total ROI guide).
Projecting income growth
Rents increase over time. In most US markets, rents have grown 3-5% annually over the last decade. A rental income calculator that projects future years should model:
- Rent growth — 2-4% per year (conservative)
- Expense growth — 2-3% per year (inflation)
- Property tax increases — varies by county, some cap at 2%/year (California Prop 13), others reassess annually
A property that barely cash flows in year 1 may generate $200-300/month by year 5 as rents rise and mortgage payments stay fixed.