How to Really Calculate Cash Flow on Your Next Rental Property

by Brandon

  • Sumo
  • CevherShare

How to Calculate Cash Flow

When I was a kid, Duck Tales was one of my favorite TV shows.

Each day after school I’d watch the adventures of Huey, Dewey, and Louie as they fought off the Beagle Boys who wanted good ‘ol Scrooge McDuck’s hard earned money. They always managed the thwart the efforts of the villains and save Scrooge’s money and, as a reward to himself, Scrooge McDuck and the three nephews would take a swim in his vault of money. Yes, you remember. They would jump of the diving board head first into mountains of gold coins. As a kid, nothing seemed more exciting than that.

So how did Scrooge get so much money? To use Scrooge’s own words, by being “smarter than the smarties, and tougher than the toughies.”

In other words, scrooge was good at business. He was smarter than the rest.

Yes, this is only a cartoon, but I think there is a valuable lesson to be learned here. If you want to succeed and swim in your own river of cash, you need to be smarter than the rest. I believe the best way to do this is through a solid grasp on the numbers.

Math is not most people’s favorite subject in school, but it might be the most important for a real estate investor. Understanding how your business makes money is imperative in helping it make more. Therefore, today I want to focus on one of the most important aspects of real estate math: Cash Flow.

In layman’s terms, cash flow is the amount of income left in your business after all the bills have been paid; this amount is often expressed as a monthly dollar amount. In the real estate rental business, cash flow is the income lefts after paying out expenses such as the mortgage, taxes, insurance, vacancies, repairs, capital expenditures, utilities, and any other expenses that affect the property.

How to Calculate Cash Flow

(Click to read on BiggerPockets…)

About Brandon

has written 199 Awesome posts in this blog.

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director and owner of RealEstateInYourTwenties.com. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

P.S. Looking for more real estate investing knowledge? If you are interested in a top-notch course to help you understand the nuts and bolts of creative real estate investing, I would like to recommend Ben Leybovich's Cash Flow Freedom University. Ben is a close friend and has been my trusted adviser for years. He's a smart guy and CFFU is pretty awesome. The course is waitlisted, but while you wait for an opening Ben will send you tons of FREE content. Seriously. Click here to check it out.

(yes, that's an affiliate link!)

Previous post:

Next post: