Punching the Numbers to find Cash Flow

Punching the Numbers to find Cash Flow

Hey guys,

I was just wondering if anyone could shed some light on how you go about calculating if a property will generate positive cash flow. I understand the basics i.e. gross income - expenses but if someone could share a specific example it would help a lot.

Secondly, how much is insurance generally? Do you guys use an umbrella type insurance or insure each home individually?

And finally, does anyone include a set maintenance amount in their calculation just in case?

Thanks in advance, you guys are a great help on here I don't think we could do it without you.




You may want to calculate all your annual expenses associated with the property and deduct those expenses from the rent you believe you can generate. Some expenses include, mortage payment, property taxes, insurance, utilties if you furnish them, repairs and a vacancy rate. If you caluculate the expenses on an annual basis, you can use use 5 to 10% for vacancy and use an average of $25 per unit each month for repairs. You may have repairs a little more if you furnish appliances. Also, take a look at your large expense items such as a roof, furnace or central air unit, age of windows, siding etc. You may want to put a little cash aside if you plan on holding the home long term. In regards to insurance, contact your local insurance agent. They can provide an accurate quote usually in minutes. You should insure each property you have, it will be required with a mortgage. You would then get an umbrella policy usually for liability purposes. You current insurance agent should be able to quote you for insurance and umbrella coverage. I hope this helps. Good luck on your future deals. Believe and Achieve! Smiling


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