What’s considered good cash flow?

[Dawson Burton]

What is good cash flow for a rental property? What numbers should I be aiming for? 

[Nicholas L.]

@Dawson Burton

this is a tough question to answer.  cash flow is really tough right now in residential / smaller RE in any market, because prices and interest rates are high.  if you buy a property in all cash, it will cash flow well, but your return won't be that great.  conversely, if you're fully leveraged, you're preserving more of your cash, but you likely won't cash flow... at all.

it also depends on how you're measuring it.  a lot of costs get ignored so that the math looks better than it actually is.  turns out, it's expensive just to transact real estate.  for example, say you buy a property with 25% down, spend $5000 on closing costs, $2500 to spruce it up, then a month's rent to a PM to get it rented out, then a few more repairs that get noticed.  then, the next month your rent is $50 more than your expenses in that specific month. did you 'cash flow' $50?  what about everything you spent to get into the property?  how long will it take to pay that back?

with that said, i have a few properties that break even, and a few that cash flow well... and the ones that cash flow have mortgages with rates in the low 4s.  i'm still buying, i'm just buying for equity right now.

hope this helps

happy to dialogue further