Will this rental actually cash flow?
A rental that pencils out on average can still bleed cash. Vacancy, repairs, and the rent you actually collect each have a range, and the bad ends of those ranges stack. This template simulates 10,000 first years of ownership so you see the odds, not just the average.
Personal Finance Intermediate Monte Carlo Pro engine
After you install, this is the model to open.
Does the Rental Property Make Money Most Months?
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.
The answer
After 10,000 simulated first years at the defaults:
- Cash flow on paper
- +$1,575 per year at the sheet's default inputs
- Chance of a losing year
- 39% of trials end the year with negative cash flow
- Median simulated year
- +$460 per year, about $1,100 below the paper number
- Bad year (P10)
- -$1,700 one year in ten is at least this deep in the red
On paper this deal clears +$1,575 a year, a 2.4% cash-on-cash return. Run the simulation and the picture changes: the median year nets only about +$460, and 39% of trials lose money, with one year in ten ending around -$1,700 or worse. The averages hide the skew: a single big repair bill or a long vacancy erases the whole year's margin. Buy deals that survive the bad years, not just the brochure year.
The model
One year of a $260,000 single-family rental bought with 25% down and a 30-year loan at 6.75%. Three inputs are uncertain:
| Purchase price | $260,000 |
| Down payment | 25% ($65,000 cash in) |
| Mortgage | 6.75%, 30 years ($1,265/mo via PMT) |
| Monthly rent | $1,950 – $2,150 – $2,300 (uncertain) |
| Vacancy rate | 2% – 6% – 14% (uncertain) |
| Annual repairs | $1,200 – $2,600 – $8,000 (uncertain) |
| Taxes + insurance | $4,900 per year |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- Which deductible really costs you less?Which Health Plan Costs Less Over a Year?
- Can you really afford six months off?Can I Afford a Sabbatical?
- What does skipping the salary negotiation really cost you?What Does Not Negotiating the Salary Cost Over a Career?
- What's the most you should pay before you walk away?Walk-Away Price Calculator
- Should you counter, or take the offer on the table?Counter or Accept
- Does selling when stocks look expensive beat holding?Market Timing vs Buy and Hold
Every model like this one, and the method behind them: Monte Carlo simulation.