Real Estate Investor · Alexandria, LA · Member since 2014 · 70 posts · 18 votes
I've been in the landlord now for about 18 months and the question I have for everyone is whats an acceptable cash flow? My rental cash flows about 300$ a month that's after:
Most on here would say that you are on excellent track...depending on other numbers. There are always a multitude of factors that go into gauging what your rental is doing. Chances are, if you are TRULY cash-flowing, it will look like this:
Rental Income
-Vacancy
-Taxes
-Insurance
-Property Management
-Maintenance Reserves
-DEBT SERVICE
=Cash Flow
If your rental is generating a genuine cash flow of $300/month, you are doing well. Personally, I evaluate my investments by their "cash on cash (CoC)" return. This tells me how much money I am getting back per year for every dollar I originally put into that deal.
Cash on Cash = Annual Net Income/Total Cash Investment in Project
I aim for 15-20% CoC return, which means that I am making $0.20 for every $1.00 I put into the project. How does yours compare? Good to hear that you are doing well thus far. Cheers!
Bob Bowling can you elaborate on your profit vs. cash flow comment. What are you personally looking for? Wouldn't a net cash flow each month still be considered net profit? Are you looking at the debt pay down too?