1. What is Rental Property Cash Flow?

Rental property cash flow is the net amount of money that remains after all expenses and tax benefits are accounted for. It's a key metric for evaluating the profitability of a rental property investment.

2. How Does the Calculator Work?

The calculator uses the cash flow formula:

Where:

• \( Rent \) — Monthly rental income (USD)
• \( Expenses \) — Monthly operating expenses (USD)
• \( Depreciation Tax Benefit \) — Monthly tax savings from depreciation (USD)

Explanation: The formula accounts for all income and expenses associated with the rental property, including the tax benefits from depreciation.

3. Importance of Cash Flow Calculation

Details: Positive cash flow indicates a profitable investment, while negative cash flow means the property is losing money. Accurate cash flow analysis is crucial for investment decisions.

4. Using the Calculator

Tips: Enter all values in USD. Include all regular expenses (mortgage, taxes, insurance, maintenance) and the calculated depreciation tax benefit for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What expenses should be included?
A: Include all operating expenses - mortgage payments, property taxes, insurance, maintenance, repairs, property management fees, and vacancies.

Q2: How is depreciation tax benefit calculated?
A: The property's value (excluding land) is depreciated over 27.5 years (residential) or 39 years (commercial), and the annual amount is multiplied by your tax rate.

Q3: What is considered good cash flow?
A: This varies by market, but generally $100-$200 per door per month is considered good for single-family rentals.

Q4: Should I include principal payments in expenses?
A: Yes, include the full mortgage payment (principal + interest) as an expense for cash flow calculations.

Q5: How does appreciation factor into this?
A: Appreciation isn't included in cash flow calculations as it's unrealized until sale. Cash flow measures current profitability.