A simple equation you can use to see a property’s potential cash flow.
How do you calculate the potential cash flow for a rental property? Real estate investments and rental properties can be wonderful ways to earn passive income, but you need to be careful. Not all rentals are the same, so you need to be able to identify which rental makes financial sense for you.
To determine if this investment will be good for you, you need to do the calculations, and I have an equation that will help you with this. First, figure out how much rental income, operating expenses, and mortgage payments will be. Factor in some additional money for unexpected expenses and vacancies. Also, operating expenses could include leasing fees, repairs, taxes, insurance, and utilities.
Once you have all those numbers, subtract your expenses from your rental income, and you’ll get a basic idea of what your cash flow will be. Be aware that these are your estimates, so they won’t be exact. However, they are the right place to start. Reach out if you have any questions, I’m always happy to help! Call or email me anytime.