What is the Monthly Cashflow of a rental property?

Monthly cash flow for a rental property is the amount of money left over after subtracting all monthly expenses from the rental income. It's a key indicator of the property's profitability.

Here's a simple example:

Rental Income:

Monthly rent collected: $2,000


  • Mortgage payment: $800
  • Property taxes: $200
  • Insurance: $50
  • Property management fees: $100
  • Maintenance: $50
  • Total expenses: $1,200

Monthly Cash Flow Calculation:

Monthly Cash Flow = Rental Income - Total Expenses Monthly Cash Flow = $2,000 - $1,200 Monthly Cash Flow = $800

In this example, the monthly cash flow for the rental property is $800. This positive cash flow indicates that, after covering all expenses, there's still $800 left as profit each month. Positive cash flow is generally desirable for investors, as it contributes to the property's overall return on investment.

What are all the possible monthly expenses for a rental property?

Monthly expenses for a rental property can vary, but here are common categories along with examples:

  1. Mortgage Payment:
    Example: $1,000 per month
  2. Property Taxes:
    Example: $200 per month
  3. Property Insurance:
    Example: $50 per month
  4. Property Management Fees:
    Example: 8-12% of monthly rent, so if the rent is $1,500, management fees might be $120 to $180.
  5. Maintenance and Repairs:
    Example: $100 per month (can vary based on property age and condition)
  6. Utilities (if paid by the property owner):
    Example: $50 for water, garbage, etc.
  7. Homeowners Association (HOA) Fees (if applicable):
    Example: $100 per month
  8. Vacancy Reserve:
    A percentage of rental income set aside for potential vacancies. Example: 5%, so if the rent is $1,500, set aside $75 per month.
  9. Capital Expenditures Reserve:
    A reserve for major property expenses (e.g., roof replacement). Example: $50 per month
  10. Landscaping and Lawn Care (if not included in property management):
    Example: $30 per month
  11. Pest Control:
    Example: $20 per month

Remember, these are just examples, and actual expenses can vary based on factors like property location, size, and condition. It's crucial for property owners to carefully estimate and track all expenses to ensure the property is financially viable and profitable.



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