Cash flow is what's actually left in your pocket each month after every real cost of owning the property is paid — the number that matters more than any other when you're deciding whether a rental is actually worth holding.
How cash flow is calculated
Monthly Cash Flow = Rent − (Mortgage + Taxes + Insurance + Maintenance + Vacancy Allowance + Management Fees). Vacancy allowance and management fees are entered as a percentage of rent since that's how most landlords budget for them — even a property you self-manage benefits from budgeting a vacancy allowance, since no rental stays occupied 100% of the time.
Related
- Best PM Software Under $50/Month
- Stessa Review (rental accounting)
- Which Property Management Software Is Right for You?