Monthly Cashflow
$60
Positive cashflow
Annual Cashflow
$720
Monthly NOI
$1,260
Cap Rate
4.32%
Cash-on-Cash
1.03%
Positive cashflow
Negative cashflow
Income
$
%
Typical: 5–10%
$
Parking, laundry, storage, etc.
Operating Expenses (monthly)
$
$
%
Of gross monthly rent
$
$
Optional — leave 0 to exclude
$
Set aside for future large repairs
Financing
$
Principal & interest, plus escrow if included
$
Used to calculate cap rate
$
Used to calculate cash-on-cash return
Projection
%
%
yrs
Monthly Breakdown
Income
Gross Rent$2,000
Vacancy (5.00%)($100)
Effective Gross Income$1,900
Operating Expenses
Property Taxes($200)
Insurance($80)
Property Management (8%)($160)
Maintenance & Repairs($100)
CapEx Reserve($100)
Total Operating Expenses($640)
Net Operating Income (NOI)$1,260
Debt Service
Mortgage Payment($1,200)
Monthly Cashflow$60
- What is rental property cashflow?
- Rental property cashflow is the money left over each month after collecting rent and paying all expenses — including the mortgage. If your property earns $2,000 in rent and your total monthly costs are $1,850, your cashflow is $150 per month.
- Positive cashflow means the property generates income without any contribution from you. Negative cashflow (sometimes called 'alligator' properties) means you're subsidizing the property each month out of pocket. Many investors accept mild negative cashflow in exchange for strong appreciation potential, though that is a speculation on price growth rather than an income strategy.
- What is NOI and how is it different from cashflow?
- Net Operating Income (NOI) is your property's income after all operating expenses but before mortgage payments. Operating expenses include taxes, insurance, management fees, maintenance, HOA, and CapEx reserves, everything except debt service.
- Cashflow subtracts the mortgage payment from NOI. NOI is useful for comparing properties regardless of how they are financed, and it is the numerator in cap rate calculations. Cashflow reflects what you actually put in your pocket, which depends on your specific loan terms.
- What is a good cash-on-cash return for a rental property?
- Cash-on-Cash Return measures your annual cashflow as a percentage of the cash you invested (usually the down payment plus closing costs). A return of 6–10% is generally considered solid for a buy-and-hold rental. Under 4% starts to look unattractive when compared to other passive options, and above 10% typically means either a great deal, a high-risk market, or optimistic expense assumptions.
- Cash-on-cash does not account for mortgage paydown, appreciation, or tax benefits, all of which can make a lower-yielding property still worthwhile. Use it as one metric alongside total return, not the only metric.
- What is cap rate and why does it matter?
- Cap rate (capitalization rate) is NOI divided by the property's value, expressed as a percentage. A property with $15,000 annual NOI and a $300,000 value has a 5% cap rate. It tells you the unlevered yield of the property, independent of how you finance it.
- Cap rate is most useful for comparing similar properties in the same market, or for estimating a property's value from its income. A higher cap rate means more income relative to price (better yield), but often comes with more risk, a less desirable location, or more maintenance.
- What expenses should be included when calculating cashflow?
- A realistic cashflow calculation should include: mortgage payment (P&I), property taxes, landlord insurance, property management fees (even if self-managing, factor in your time), a vacancy allowance (5–10% of gross rent), maintenance and repairs, CapEx reserves for future large expenses like roofs and HVAC, and any HOA fees.
- The most common mistake new investors make is ignoring vacancy, maintenance, and CapEx. These are irregular but inevitable. Budgeting $100–$200 per month for CapEx on a single-family home is a reasonable starting point depending on the property's age and condition.
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