1. What is Rental Income Cash Flow?

Rental income cash flow is the net amount of cash generated by a rental property after accounting for operating expenses and debt service. It's a key metric for evaluating the profitability of real estate investments.

2. How Does the Calculator Work?

The calculator uses the cash flow formula:

Where:

• \( \text{Rental Income} \) — Total income from rent payments
• \( \text{Operating Expenses} \) — Costs to maintain and operate the property
• \( \text{Debt Service} \) — Mortgage payments and other loan obligations

Explanation: Positive cash flow indicates the property generates more income than expenses, while negative cash flow means expenses exceed income.

3. Importance of Cash Flow Calculation

Details: Calculating cash flow helps investors assess property profitability, make informed purchase decisions, and manage ongoing financial obligations.

4. Using the Calculator

Tips: Enter all values in USD. Include all rental income sources, typical operating expenses (taxes, insurance, maintenance), and total mortgage payments.

5. Frequently Asked Questions (FAQ)

Q1: What's 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 vacancy rate in operating expenses?
A: Yes, a vacancy allowance (typically 5-10% of rental income) should be included in operating expenses.

Q3: What's the difference between cash flow and profit?
A: Cash flow measures actual money movement, while profit is an accounting concept that includes non-cash items like depreciation.

Q4: How often should I calculate cash flow?
A: Monthly calculations are most common, but quarterly or annual reviews are also valuable for long-term planning.

Q5: What if my cash flow is negative?
A: Consider raising rents (if market allows), reducing expenses, refinancing debt, or whether the property has other benefits like appreciation potential.