Is 300-400 good cash flow for a property after expenses are paid?

[Baahir Starkey]

Trying to figure out if 300$-400$ is good cash flow for a property that’s 180,000 ?

[Neil Schoepp]

@Baahir Starkey

First let's define cash flow so we are talking the same language. 

Cash flow is the income you have left after you have paid all the OPEX  AND debt servicing on a property. Way to many people minus the expenses from the income and call that cash flow. This is more specifically cash flow before taxes. So 300 X 12 = 3600 (annual cash flow)

The next number you will need is to add up how much cash you took out of your pocket to acquire the asset. Down Payment and closing cost. Let's say 40-kay.

Take your annual cash flow of 3600 and divide by your out of pocket cost 40000 that equals your Cash on Cash (COC) of .09 or 9%.

Only you can decide if that is a good number. I personally shoot for nothing under 10% I know some investors that are happy with 5 to 6% and still others that won't touch anything under 15%.

Now you gave a range so if you end up at 350 a month that's 4200 annually and a 10.5% COC. $400 would do even better just make sure of your numbers don't believe you can get, KNOW you can get.

With all that being said the average is 8 to 12%. 

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