1. What Is Cash Flow In Real Estate?

Cash flow in real estate refers to the net amount of cash and cash-equivalents being transferred into and out of a property investment. It's calculated as the difference between rental income and all property-related expenses.

2. How Does The Calculator Work?

The calculator uses the simple cash flow formula:

Where:

• \( \text{Income} \) — Total rental income and other property revenues (USD)
• \( \text{Expenses} \) — All property-related expenses including mortgage, taxes, maintenance, etc. (USD)

Explanation: Positive cash flow indicates the property generates more income than expenses, while negative cash flow means expenses exceed income.

3. Importance Of Cash Flow Calculation

Details: Calculating cash flow is essential for real estate investors to determine profitability, assess investment viability, and make informed decisions about property acquisitions and management.

4. Using The Calculator

Tips: Enter total income and expenses in USD. Both values must be non-negative numbers. The calculator will compute the net cash flow.

5. Frequently Asked Questions (FAQ)

Q1: What constitutes income in real estate cash flow?
A: Income typically includes rental payments, laundry income, parking fees, and any other revenue generated by the property.

Q2: What expenses should be included?
A: Expenses include mortgage payments, property taxes, insurance, maintenance costs, utilities, property management fees, and vacancy reserves.

Q3: What is considered good cash flow in real estate?
A: While it varies by market, a common benchmark is $100-200 per door per month in positive cash flow after all expenses.

Q4: How does cash flow differ from profit?
A: Cash flow represents actual money moving in and out, while profit is an accounting concept that may include non-cash items like depreciation.

Q5: Should I aim for positive cash flow immediately?
A: While positive cash flow is ideal, some investors accept negative cash flow in appreciating markets expecting long-term capital gains.