Cash Flow

Cash flow is the money a rental property generates each month after all operating expenses and the mortgage payment are paid.

Cash flow is what a rental property actually puts in your pocket: the rent collected minus every expense — taxes, insurance, management, maintenance, reserves for vacancy and big repairs — and minus the mortgage payment. It is the number buy-and-hold investors care about most, because it is the difference between a property that pays you monthly and one you pay to keep.

Run the math on a hypothetical rental: $1,200 a month in rent is $14,400 a year. Take out $2,000 for taxes and insurance, $1,400 for management, $1,400 for maintenance and vacancy reserves, and $7,200 in annual mortgage payments, and you are left with about $2,400 a year — $200 a month in cash flow. Change any input and the number moves fast, which is why serious buyers underwrite line by line instead of eyeballing it.

What beginners get wrong is the shortcut: rent minus mortgage equals cash flow. It does not. Vacancy, turnover, management, and capital expenses — the roof, the furnace, the water heater — are real costs even in months when nothing breaks, and skipping them turns a losing property into a paper winner. Cash-flow buyers are also the demand behind most rental wholesale deals; on Buy Box Cartel, Section 8 rentals are the largest deal segment on the platform, because voucher rent arriving on schedule is exactly the kind of income these buyers underwrite for.