Question 1

What is rental property cash flow?

Accepted Answer

Pre-tax cash flow is the income left after estimated operating expenses and annual debt service. This calculator does not include income tax, depreciation, principal paydown, appreciation or sale costs.

Question 2

How is NOI different from cash flow?

Accepted Answer

Net operating income, or NOI, is effective gross income minus operating expenses before financing. Pre-tax cash flow subtracts annual debt service from NOI, so it reflects the impact of the mortgage payment.

Question 3

What is cash-on-cash return?

Accepted Answer

Cash-on-cash return divides annual pre-tax cash flow by cash invested. Here, cash invested is the down payment plus the closing costs entered. It is an estimate and is not the same as total investment return.

Question 4

What does break-even occupancy mean?

Accepted Answer

Break-even occupancy is the estimated portion of potential gross income needed to cover operating expenses and annual debt service. A result above 100 percent means the current assumptions do not cover all modeled costs even at full occupancy.


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