The Adventures of Calculating Actual Cash Flow on a Rental Property

[Ariel Semino Garcia]

"The Adventures of Calculating Actual Cash Flow on a Rental Property"

Are you ready to become a landlord, but have no idea how to calculate your actual cash flow? Fear not, dear reader, for I am here to guide you on this exciting journey!

Actual cash flow is like the holy grail of rental properties – it tells you how much money you'll have left over after paying all the bills. And let's be real, who doesn't want to make money while they sleep?

But before we dive into the formula, let's meet the players in this real estate drama:

1. Rental Income: The star of the show – this is the money you receive from renting out your property.
2. Mortgage Payment: The giant elephant in the room – this can be a hefty expense, but don't worry, it's worth it in the long run.
3. Property Taxes: The government's cut – just like paying taxes on your salary, you have to pay taxes on your rental property too.
4. Insurance: The safety net – protects your property and your finances in case of natural disasters or accidents.
5. Repairs and Maintenance: The handyman – because things break, it's just a fact of life.
6. Utilities: The energy boosters – keep your tenants comfortable and happy.
7. Property Management Fees (if applicable): The middleman – if you don't have the time or patience to deal with the day-to-day responsibilities of being a landlord, this is the solution.

Now that you know the players, let's get to the formula:

Actual Cash Flow = Rental Income - (Mortgage Payment + Property Taxes + Insurance + Repairs and Maintenance + Utilities + Property Management Fees)

It's simple, yet powerful. Just subtract all the operating expenses from the rental income and voila! You have your actual cash flow.

In conclusion, calculating actual cash flow may seem intimidating at first, but it's worth it to know if your rental property is a money-making machine or a money pit. So, take a deep breath and start crunching the numbers – who knows, you might be surprised at how much money you can make while you sleep!