Real Estate Investors: Are You Tracking Cash Flow or Just Watching Your Bank Balance?

Question

Money coming in doesn’t always mean a property is profitable. Repairs, loan payments, capital expenses, and taxes can tell a very different story.

If I asked you right now how much your rentals actually made last month, could you give me a number?

Rosina Persaud · Answer

William, the balance lies in predictable ways when you run rentals.

At 236 doors, heavy Section 8, one house can show a healthy deposit that is actually two payers — the housing authority portion and the tenant portion — plus a partial payment mid-month. The balance looks fine while that house is quietly six weeks behind on its tenant portion.

So we run a per-property ledger and reconcile the day money lands: date, amount, method, and the running balance owed on that house. No waiting for month-end.

The number that matters is collected rent against scheduled rent, with vacancy days counted separately. The bank balance is a snapshot. The ledger is the truth.

Jimmy Samaha · Answer

Took me longer than I'd like to admit to get this right. For years I basically watched the account, and a good month always felt great until the tax bill or a boiler showed up.

What fixed it for me was simple. One separate bank account per property, and every month I move a set amount out of rent into a reserve before I count anything as profit. I use roughly 10% for repairs and another 5 to 10% for capex depending on how old the roof and mechanicals are. Taxes and insurance get counted monthly even if they're paid twice a year.

So on a house renting for 2,500, if the mortgage, taxes and insurance are 1,800, it looks like 700 a month. After 250 for repairs and 200 for capex, the real number is closer to 250. That's what I write down as what it made, and when the big repair comes the money's already sitting there instead of coming out of my pocket.

Real Estate Investors: Are You Tracking Cash Flow or Just Watching Your Bank Balance?

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