How much cashflow is "enough"?

Question

I'm interested to hear how much cashflow investors think is "adequate"--given various other relevant factors (such as the number and grade of their properties, the equity/leverage position, the total valuation of the portfolio, typical annual appreciation in property value and rent, the cash reserves, etc.).

(When I say "cashflow", I mean the average monthly net across the entire portfolio after mortgages/debt services, taxes, insurance, CapEx, vacancy, and all other expenses are deducted).

For the sake of simplicity, let's assume that the investor has NO other sources of income other than their rentals (they don't have a W2 job or anything).Obviously, how much cashflow is "adequate" depends on an investor's unique situation (for instance, $5,000/month cashflow might be great for a person with one rental, but it might be totally insufficient for someone with 500 units....similarly, $1,000/month cashflow might be great if all you've invested is $5k, but $1,000/month cashflow would probably be terrible if you've invested 10 million).

So, what cashflow do you consider "adequate" given other relevant factors?

...interested to get folks' perspectives on this!

Leo R. · Answer

@Joe Villeneuve it's an open-ended question; obviously there is no "correct" answer that I'm looking for, and the answers presumably vary widely depending on the person.

I'm asking, because I'm interested in hearing people's views on what they would, and what they would not consider an "adequate" cashflow situation, given relevant factors.

Another way of framing the question could be:  what is your current cashflow situation, in the context of the other relevant factors, and do you feel that your cashflow is "adequate" for you?

Joe Villeneuve · Answer

Why?  What possible purpose could anyone's answer to this question serve?  Besides, the answer would probably be in the form of an "average", which is a useless number to begin with.  Averages serve no purpose as a goal.

Theresa Harris · Answer

If you are starting out and have no job and only rental income to live off of, I'd be worried.  If you are older and retiring from a job and have paid off rentals, different story.  Most rentals with mortgages aren't going to cash flow a lot meaning you'd have to have a large number of rentals AND a good contingency fund for repairs and maintenance.

What you need to live off of really depends on the individual and their circumstances (what expenses do they have, what do they think they need each month).

Sergey A. Petrov · Answer

I think what you are really asking is how much cash flow do people consider “enough” to live off of. And yes that’ll vary wildly. If the question is how much return is adequate than it should be stated in percentages vs dollars. $10k/mo cash flow is one stupid decision if you invested $100 mil to generate that