The formula
How to calculate rental cash flow
Cash flow is what actually reaches your bank account each month once the tenant has paid and everyone else has been paid. It is the number that decides whether a rental property is sustainable or subsidised.
Vacancy and management are applied to the rent before fixed costs are deducted, which is the correct order — the agent takes a percentage of what is collected, not of what was advertised.
The inputs, one by one:
- Monthly rent
- Monthly mortgage payment
- Management fee (%)
- Other monthly costs — insurance, service charge, ground rent, maintenance allowance
- Vacancy allowance (%)
No submit button: type and the answer moves. Your inputs end up in the link, so the page can be shared already filled in.
Where a figure is not immediately to hand — a precise interest rate, an exact balance — a reasonable estimate is a perfectly good starting point. Because every result updates instantly, refining a rough guess into the real figure once you have it takes a moment, and nothing about the calculation depends on getting it exactly right on the first attempt.
Why rental cash flow matters
The formula behind rental cash flow is standard and has not changed in decades; what changes is the situation it gets applied to. Two households can run the identical calculation and land on very different conclusions once their own numbers — income, rate, term, balance — are dropped in, which is why a generic textbook example is less useful than a calculator you can adjust to match your own circumstances.
Beyond a one-off check, the same calculation is worth revisiting whenever the underlying numbers change — a new interest rate, a change in income, a different term. Because the figures live in the page's own web address, coming back to update just one field and compare the new result against the old one takes seconds rather than starting again from a blank page.
The reason a page like this exists at all, rather than leaving the calculation to a spreadsheet or a textbook appendix, is that the formula behind rental cash flow is fiddly enough to get wrong by hand but not complicated enough to need specialist software. That middle ground — real enough maths to matter, simple enough to check instantly — is exactly what a dedicated calculator is for, and it is why the same figure recalculated here should match a careful manual calculation almost exactly.
Where the same calculation needs to be run for several different scenarios side by side — three loan offers, two savings plans — the fastest approach is usually to open the calculator in a second browser tab for each one, so that the results can be compared directly rather than overwriting each other in a single set of fields.
Worked example
Take the figures the calculator starts with:
- Monthly rent: 1,400
- Monthly mortgage payment: 780
- Management fee: 10 %
- Other monthly costs: 180
- Vacancy allowance: 8 %
That gives:
- Monthly cash flow: 199.2
- Annual cash flow: 2,390.4
- Cash flow as a share of rent: 14.23 %
These figures are only the calculator's own starting values, included so the working is visible rather than hidden inside the tool above. Replace them with your own numbers and the same arithmetic applies — nothing about the method changes, only the inputs feeding it.
Reading the result
Positive cash flow means the property funds itself. Negative means you are topping it up monthly in the hope of capital growth, which is a legitimate strategy but a very different one, and it is vulnerable to rate rises.
Where this goes wrong. Ignoring tax. Since 2020 landlords cannot deduct mortgage interest from rental income and receive only a basic-rate credit, so a higher-rate taxpayer can face a tax bill that exceeds the cash flow shown here.
A useful check on any unfamiliar result is to compare it against a rough mental estimate first — round the inputs to convenient numbers and see whether the calculator's answer lands in roughly the same territory. A wildly different figure usually means one of the fields was entered in the wrong unit, most often a percentage typed as a whole number where a decimal was expected, or the reverse.
Many investors use £150–£250 per property per month as a working minimum, on the grounds that anything less is consumed by the first boiler replacement or void.
It leaves your account, so it belongs in cash flow. But it is not an economic loss — it converts cash into equity, which is why interest-only mortgages show better cash flow and build no ownership.
The answer it gives you is monthly cash flow. With 1,400 monthly rent, 780 monthly mortgage payment and 10 % management fee, that comes to 199.2. Change any field and the figure moves with it.
Whenever one of the underlying figures changes — a new interest rate, a different balance, an updated term — since the result only reflects what is currently in the fields. There is no need to keep a separate record of past results; the web address for a filled-in version already carries the figures used to produce it.
Not unless a tax rate or a fee is explicitly one of the inputs above. Where it is not, the figure shown is a gross calculation, and any tax due depends on your personal circumstances and current tax rules, which are worth checking separately.
The arithmetic itself is exact — the calculator applies the formula shown above precisely, with no rounding until the final figure is displayed. The uncertainty, where it exists, is entirely in the inputs: an estimated rate or an approximate balance carries that same approximation through to the result.