1. What is Cash Flow in Rental Properties?

Cash flow is the net amount of cash being transferred into and out of a rental property. Positive cash flow means the property generates more income than expenses, while negative cash flow indicates the opposite.

2. How Does the Calculator Work?

The calculator uses the cash flow formula:

Where:

• Rental Income — Total monthly rent collected from tenants
• Expenses — All property-related expenses (maintenance, taxes, insurance, etc.)
• Mortgage Payment — Monthly loan payment for the property

Explanation: This simple calculation helps landlords understand their monthly profit or loss from a rental property.

3. Importance of Cash Flow Calculation

Details: Positive cash flow is essential for long-term rental property success. It ensures the property generates profit after all expenses and helps cover unexpected costs.

4. Using the Calculator

Tips: Enter all values in dollars. Be sure to include all expenses (property taxes, insurance, maintenance, vacancies, etc.) for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What is considered good cash flow for a rental property?
A: Generally, $100-$200 per door per month is considered good, but this varies by market and property type.

Q2: Should I include depreciation in my cash flow calculation?
A: No, cash flow calculations use actual cash expenses. Depreciation is a non-cash expense used for tax purposes.

Q3: How often should I calculate cash flow?
A: Monthly calculations are most common, but you should also do annual projections to account for seasonal variations.

Q4: What expenses are often forgotten in cash flow calculations?
A: Common omissions include vacancy allowance, capital expenditures, property management fees, and routine maintenance.

Q5: Is positive cash flow always better?
A: Not necessarily. Some properties with negative cash flow may appreciate significantly, but they're generally riskier investments.