Most people get into rental real estate because someone told them it was a good investment. And it can be. But the difference between a rental property that builds wealth and one that drains your bank account every month comes down to one thing. Cash flow.
Cash flow is not a complicated concept. It is simply the money left over after every expense is paid. Rent comes in, mortgage goes out, insurance goes out, taxes go out, maintenance goes out, vacancy loss goes out, and whatever is left is your cash flow. If that number is positive you are making money. If it is negative you are writing a check every month to own a property someone else is living in.
This site is built to help you understand how to evaluate rental property cash flow before you buy, how to improve cash flow on properties you already own, and how to avoid the common mistakes that turn what looks like a great deal on paper into a money pit in reality.
We break down the actual numbers behind rental property investing. Not theory, not motivational fluff, just the math that determines whether a property makes or loses money.
Topics include how to calculate cash flow before you close on a property, understanding the difference between cash on cash return and overall ROI, why the 1% rule is a starting point and not a finish line, how to account for expenses most new investors forget about, and how vacancy rates can make or break your annual returns.
Every article on this site uses real world examples with actual numbers. If you cannot plug your own property into these formulas and get a clear answer, the formula is useless. We keep it practical.
Monthly Gross Rent minus Mortgage Payment (PITI) minus Maintenance Reserve (typically 8-10% of rent) minus Vacancy Reserve (typically 5-8% of rent) minus Property Management (if applicable, 8-10% of rent) minus Any other recurring costs equals Monthly Cash Flow
If that bottom number is not positive by at least $100-200 per door after all real expenses, the deal needs a second look. Many experienced investors will not touch a property that does not cash flow at least $200 per unit per month because anything less does not leave enough margin for the unexpected.