Am I Missing Anything in My Cash Flow Model??

Question

I'm building out my Cash Flow model and want to make sure i'm covering any and all Cash Flow considerations?

Mortgage

Mortgage Insurance

Insurance Premium

Cap Ex

Maintenance Estimate

Property Tax

Water

Garbage

Vacancy

Property Management

Also, how do I go about my mortgage insurance estimate. I have an estimate from my lender but am wondering how accurate it is? He quoted $70 / month.

Nick

David Faulkner · Answer

How about rental income? I would think that one would be kinda important to cash flow calculations ;)

Gardner/Yard Maintenance? Or could be in with "Maintenance Estimate"

HOA fees, if applicable?

Also, a few key things IMO to remember ... all of these things are NOT fixed ... they change over time and not all of them change over time at the same rate or at the standard rate of inflation. Be wary of any calculations the implicitly or explicitly assume that they are fixed.

Also, many of these things vary with the region you invest in, so be wary of estimates adopted from other markets and trying to apply them to your market. You need local numbers.

Also, none of these (with the exception of Vacancy) scale linearly with gross rental income, so if you can forget about calculating them with any sort of accuracy as a percentage of rent ... I know a lot of calculators (BP included) attempt to do it that way, but that is just plain lazy and not too bright IMO.

Finally, remember that cash flow is an important thing, but it is not the only thing ... ignore any or all of the other things at your own peril. No cash flow blinders!

Nick Lemieux · Answer

@David Faulkner haha i just copied my monthly expenses over! Always got my income on the mind...

Ya I figure lawn care would go under my maintenance estimate ... but will be using FHA so will be on site to cut for the next year at least.

Great point on the local numbers. I pulled Cap Ex numbers from some blog post and it had the cost of a roof at $5000. My mom just had ours done not far from my target area and I think it was more in the 8-9K area.

Will defiantly be keeping appreciation and value add in mind! But looking at the cash flow as my foundation.