Real estate & rental
Rental Cash Flow Calculator
Works rental cash flow, which is what is left after everything including the reserve.
Result
Profit and cash are different things and a growing contractor can run out of cash while profitable, because the work is paid for before the invoice is. This models collection speed, not seasonality.
Get a Free Business AuditHow the calculation works
Rental income less vacancy, less operating expenses, less a capital reserve, less debt service, giving monthly and annual cash flow. Including the reserve is what separates a cash flow figure from a wishful one, since the components it funds will need replacing whether or not they were budgeted for.
What moves the number
- Vacancy allowance.
- Operating expenses including management.
- Capital reserve by component.
- Debt service at the actual rate.
Where this one goes wrong
A property described as cash flow positive without a reserve is borrowing from its own future, and the loan comes due when the roof does. Include the reserve and accept the lower number. The other adjustment worth making is that cash flow is monthly and uneven, so an annual positive figure can contain several negative months, which is a liquidity question rather than a profitability one and needs its own answer.
Before you quote
- Include a capital reserve before calling cash flow positive.
- Model the year by month to find the negative ones.
- Use a realistic vacancy allowance.
Questions
About this calculator
Should a capital reserve come out of cash flow?
Yes, otherwise the figure borrows from the property's future and the loan comes due when the roof does. A property described as cash flow positive without a reserve is usually not, and accepting the lower number is the honest version.
Can annual cash flow be positive and monthly be negative?
Routinely, when tax instalments and insurance renewals land together. That is a liquidity question rather than a profitability one, and it needs a reserve rather than a better annual figure, which is why modelling by month is worth doing once.
What vacancy allowance should I use?
Something rather than nothing, informed by local market conditions and your own turnover history. For a small holding the allowance is a planning figure, since the actual experience is lumpy, which is a separate argument for holding reserves.
The formula
cash tied up = daily invoicing x days to get paid
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How to use this calculator
- Invoiced per month ($). Enter your own figure; the page starts at $38,000.
- Payment terms (days). Enter your own figure; the page starts at 30.
- Days clients actually take. Enter your own figure; the page starts at 46.
- Costs paid out per month ($). Enter your own figure; the page starts at $38,000.
- Cash in the bank now ($). Enter your own figure; the page starts at $22,000.
The result updates as you type, so you can try a figure, see what it does to days of funding gap, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Invoiced per month | $38,000 |
| Payment terms (days) | 30 |
| Days clients actually take | 46 |
| Costs paid out per month | $38,000 |
| Cash in the bank now | $22,000 |
What comes out
| Result | Value |
|---|---|
| Days of funding gap main result | 16 |
| Cash tied up in invoices | $58,267 |
| Monthly surplus | $0 |
| Months of cover | 999.0 |
There is $58,267 sitting in unpaid invoices, and customers take 16 days longer than your terms allow. That gap is the money you are lending them for free.
How sensitive the answer is
Holding everything else steady and changing only invoiced per month, this is what happens to days of funding gap. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Invoiced per month ($) | Days of funding gap |
|---|---|
| $19,000 | 16 |
| $28,500 | 16 |
| $38,000 example above | 16 |
| $57,000 | 16 |
| $76,000 | 16 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Invoiced per month ($)
- A money amount, starting at $38,000.
- Payment terms (days)
- A number, between 0 and 180, starting at 30.
- Days clients actually take
- A number, between 0 and 365, starting at 46.
- Costs paid out per month ($)
- A money amount, starting at $38,000.
- Cash in the bank now ($)
- A money amount, starting at $22,000.
What the results tell you
| Result | What it is |
|---|---|
| Days of funding gap | The headline result. A number. |
| Cash tied up in invoices | A money figure. |
| Monthly surplus | A money figure. |
| Months of cover | A decimal figure. |
What is not in this number
Property figures here exclude the costs that decide whether a deal works: vacancy, maintenance, management, capital expenditure and the transaction costs at both ends. A return that looks strong before those frequently does not survive them.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.