Building Wealth Through Rental Properties

A Beginner’s Guide to Real Estate Investing!

Cash Flow

Cash flow is the amount of money the property generates after subtracting all expenses from the rental income. It represents the net income or profit earned from the property on a periodic basis, typically monthly or annually. Positive cash flow indicates that the rental income exceeds the total expenses, resulting in a surplus of cash, while negative cash flow occurs when the expenses exceed the rental income, resulting in a shortfall of cash

Rental Income: The total income generated from rent collected from tenants, including any additional sources of rental income like parking, laundry, etc.

Operating Expenses: The ongoing costs associated with owning and maintaining the property, such as property taxes, insurance, maintenance and repairs, utilities, property management fees, HOA fees, and Miscellaneous Expenses.

Financing Expenses: Expenses related to financing the property, including interest payments, loan origination fees, points, and other financing costs.

Taxes: Other taxes associated with the property, such as income tax on rental income, local business taxes, and occupancy taxes.

Capital Expenses: Large expenses for major improvements or replacements of building components, such as a new roof, HVAC system, appliances, or flooring. These expenses are less frequent but can have a significant impact on the property’s financial performance.

Miscellaneous Expenses: Other miscellaneous expenses such as legal and professional fees, advertising and marketing costs, property association dues, permits and licenses, and travel expenses related to property management.

Disclaimer: The Cash Flow Calculator is a financial tool intended for general informational purposes only. It does not constitute financial advice and should not be relied upon for making financial decisions. Users should consult with a qualified financial advisor for personalized guidance. The accuracy of the calculator’s results is dependent on the accuracy of the data provided by the user.