Cash flow
The money left over from rental income each month after paying all expenses, including the mortgage. Positive cash flow means the property pays you to own it.
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See how it worksWhere this comes up: on the market
Part 1 of 4
Why a seller cares
Cash flow is what an investor expects to have left each month after every expense and the mortgage, and it is the number their offer on your rental has to make work. A negative cash flow at your asking price means no investor offer.
Part 2 of 4
A simple example
Your rental brings $1,700 a month. Taxes, insurance, maintenance and management take $600, and the investor's mortgage at your price would be $1,200.
| At the price offered | The investor's monthly cash flow |
|---|---|
| $240,000 | About negative $100; no offer |
| $210,000 | About $50; a thin offer |
| $190,000 | About $150; the offer they make |
The investor's offer is the price at which your rent still leaves them something.
Part 3 of 4
What people get wrong
That a rented house is worth more because it has income. It is worth what the income supports, which can be less than an empty one.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines cash flow in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
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