1. What is Rental Property Cash Flow?

Rental property cash flow is the net amount of money that remains after all expenses are paid. Positive cash flow indicates profitability, while negative cash flow means the property is costing money each month.

2. How Does the Calculator Work?

The calculator uses the cash flow formula:

Where:

• Rental Income — Monthly rental income from tenants
• Operating Expenses — Monthly costs like maintenance, taxes, insurance
• Mortgage Payments — Monthly loan payments
• Purchase Costs Amortized — One-time purchase costs spread over time

Explanation: The formula accounts for all income and expenses to determine the property's monthly profitability.

3. Importance of Cash Flow Calculation

Details: Calculating cash flow helps investors evaluate property profitability, assess risk, and make informed purchase decisions.

4. Using the Calculator

Tips: Enter all dollar amounts as positive numbers. For purchase costs, specify how many months to amortize them over (typically 12-60 months).

5. Frequently Asked Questions (FAQ)

Q1: What's considered good cash flow?
A: Generally $100-$200 per door is good for beginners. More experienced investors may accept lower cash flow for appreciation potential.

Q2: Should I include vacancy rate?
A: Yes, either reduce rental income by your expected vacancy % or include it in operating expenses.

Q3: What are typical purchase costs?
A: Includes closing costs, inspections, repairs before renting, and other one-time acquisition expenses.

Q4: How does amortization period affect results?
A: Shorter periods show lower initial cash flow but more accurate long-term picture. Longer periods make initial cash flow appear better.

Q5: Should I include principal payments in cash flow?
A: Yes, mortgage payments (principal + interest) are an expense. Principal repayment builds equity but isn't tax deductible.