1. What is Real Estate Investment Cash Flow?

Cash flow is the net amount of cash being transferred into and out of a real estate investment. Positive cash flow indicates that a property is generating more income than expenses, while negative cash flow means the opposite.

2. How Does the Calculator Work?

The calculator uses the cash flow formula:

Where:

• Rental Income — Total income from property rentals
• Operating Expenses — All property-related expenses (maintenance, taxes, insurance, etc.)
• Mortgage Payments — Principal and interest payments on the property loan

Explanation: The formula calculates the remaining cash after all expenses and mortgage payments are deducted from rental income.

3. Importance of Cash Flow Calculation

Details: Cash flow analysis is crucial for determining a property's profitability, assessing investment viability, and making informed financial decisions about real estate investments.

4. Using the Calculator

Tips: Enter all values in dollars. Be sure to include all operating expenses and accurate mortgage payment information for reliable results.

5. Frequently Asked Questions (FAQ)

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

Q2: Should I include property management fees in operating expenses?
A: Yes, all property-related expenses should be included in operating expenses for accurate calculation.

Q3: How does cash flow differ from profit?
A: Cash flow represents actual money moving in and out, while profit is an accounting concept that may include non-cash items like depreciation.

Q4: What if my cash flow is negative?
A: Negative cash flow means you're losing money each month. This might be acceptable temporarily if you expect property appreciation, but isn't sustainable long-term.

Q5: Should I include principal payments in mortgage payments?
A: Yes, include both principal and interest portions of your mortgage payment in the calculation.