Investing in Real Estate for Cash Flow

Did you ever wonder about renting out a house that you own? What kind of expenses you might expect? How much money you might make?

If you have, the following tool is right up your alley. It was inspired by a post at Adventures in Money Making, which provided the math for determining how much cash can be generated from a rental property. The default numbers are those provided in the original post's example, so you should change them to better fit your rental investment:

Monthly Rental Data
Input Data	Values
Amount You Charge for Rent ($USD)
Rental Vacancy Rate (%)
Ownership Expenses
Amount of Down Payment on Rental Property ($USD)
Amount of Monthly Mortgage Payment ($USD)
Amount of Taxes per Month ($USD)
Amount of Insurance per Month ($USD)
Maintenance Expenses per Month ($USD)
Monthly Property Management Fees ($USD)

Rental Income and Cash Flow
Calculated Results	Values
Expected Monthly Income from Rental ($USD)
Monthly Cash Flow (Income after Expenses) ($USD)
Annual Cash Flow (Income after Expenses) ($USD)
Cash on Cash Return (%)

The goal, of course, is to have a positive cash flow value, with a cash on cash return well ahead of what you could have earned through another investment. For reference, the owner of the property in the example, Empty Spaces, Inc., tries to generate at least a 16% cash on cash return in areas where property prices are rapidly appreciating, and a 30% cash on cash return in areas where the rate of property value appreciation is low.

You should also note that the mortgage amount in the example is obtained by adding the owner's two interest-only mortgages together. Your method of financing your rental property may be considerably different.