It's not just about cashflow

Everybody loves the idea of getting cashflow from the propperty they own.

Cashflow is the financial result of the income from your propperty minus all the expenses.

But is this the truth?

Ofcourse the cashflow is the immedietly result of your investment what you can see the first month after you got your first incom from your propperty.

But there is al underlaying level of income maby you did not see before.

It is the law of paying of dept.

While your tenant pays the rent to you, you have to pay the interest to the bank. The interest will cost you money. But you also pay of your mortage. Here is where the party begins for you.

Every month you pay of your depth (mortage) your investment is gonna be more from you.

Or you can say equit is going up.

Depending on the terms you pay of the property in 20-30 years.

It is not that you payed off the mortage with your own earned money, it is payed from the rent you collect every month.

So you didn't pay for it, it is the tenant.

While the cashflow sometimes doesn't make sence in first sight, the paying of the depth does.

For example: After paying all the expences in some cases you just get $ 50.-- in cashflow.

This doesn't make big sence to you at first sight.

But a closer look will tell you that you pay off your mortage with $200,-- every month. This is not money you will get in your hand inmedietly, but it stays in your investment.

This $ 200,-- added up by the $ 50,-- casflow is an income and surplus of $ 250,-- combined.

This makes more sence.

Depended on the kind of your mortage you also pay less interest every month. This number doesn't make sence the first month, but after a copple of years the interest is gowing down signifficant. 

Where do you see the surplus from your investment?