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Another much quicker way to estimate cash flow is using a technique known as the50% rule. This rule of thumb states that a rental property鈥檚 expenses tend to be about 50% of the income, not including the mortgage principal and interest (PI) payment. The formula looks like this: Cash Flow = (Total Income x.5) 鈥?Mortgage PI
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How do you estimate rental property cash flow?
Another much quicker way to estimate cash flow is using a technique known as the 50% rule. This rule of thumb states that a rental property鈥檚 expenses tend to be about 50% of the income, not including the mortgage principal and interest (PI) payment. The formula looks like this: Cash Flow = (Total Income x.5) 鈥?Mortgage PI
How much return do you expect on your rental property?
I like to see high returns on my rental properties; over 20% cash on cash. Some people would be happy with 15%, 10%, or even 5% returns on their cash. I also think you need to determine how much cash flow per month is enough.
What is real estate cash flow and how does it work?
You can think of real estate cash flow sort of like a waterfall. The investor (you) is at the bottom. Here鈥檚 what that waterfall looks like: Collect rent. Operating expense payments (taxes, insurance, maintenance, etc) Capital expense payments (replace roof, heat-air system, etc) Mortgage payments. Income tax payments.
How much cash on cash should I invest in rental properties?
Our cash on cash calculator can help you determine what the actual returns will be on your cash invested. I like to see high returns on my rental properties; over 20% cash on cash. Some people would be happy with 15%, 10%, or even 5% returns on their cash. I also think you need to determine how much cash flow per month is enough.