What This Calculator Does

This tool puts the same property in two columns: bought with cash and bought with financing. It shows the cash needed at purchase, the monthly cost, the monthly cash flow if rented, and the total interest paid over the loan term, so you can see the tradeoffs side by side.

Who It's For

It is for investors deciding how to fund a purchase, and for agents and lenders who help clients understand the difference. It is also useful for comparing how much capital a cash deal ties up versus what financing frees.

What Each Input Means

  • Purchase price: the price of the property in both columns.
  • Cash closing costs: title, escrow, and recording costs for a cash purchase.
  • Down payment, rate, term, financed closing costs: the financing structure for the second column.
  • Monthly rent and operating expenses: used to estimate cash flow if the property is rented.

How the Calculation Works

  • Cash column: cash needed = price plus cash closing costs. Monthly cost = operating expenses. Cash flow = rent minus operating expenses. Interest = zero.
  • Financed column: cash needed = down payment plus financed closing costs. Monthly cost = mortgage payment plus operating expenses. Cash flow = rent minus monthly cost. Interest = total interest over the loan term.

What the Output Means

The cash column shows what full ownership costs and produces with no debt. The financed column shows the same property with leverage: less cash up front, higher monthly cost, lower cash flow, and interest paid over time. Neither column is the better answer; the better answer depends on your capital, goals, and risk tolerance.

Common Questions

  • Does financing always mean lower cash flow? Usually, because the mortgage payment is added, but a lower down payment frees capital for other uses. The tradeoff is between cash flow and capital efficiency.
  • Should I include tax benefits? Tax treatment of mortgage interest and depreciation varies by investor and entity. This calculator does not model taxes; your tax professional can.
  • What about opportunity cost? The calculator does not model what your cash could earn elsewhere. That is part of your own analysis.

Limitations

The comparison is based on the inputs you enter and does not model taxes, appreciation, refinancing, or the opportunity cost of capital. Interest paid assumes the loan runs the full term at the entered rate. Lenders' actual rates, terms, and requirements vary.

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