Calculate cash flow for a rewarding investment
In the context of rental investment properties, understanding cash flow isn’t difficult. For example, if the money used to maintain your property is greater than the money the property generates, your investment has a negative cash flow. If income and expenses cancel out, you have zero cash flow, and if your rental property turns a profit, you have positive cash flow.
Mortgage House is here to assist with your investor home loan and turn it into positive cash flow. In an ideal investment market, positive cash flow is lucrative, and when combined with long-term appreciation of the property, the investment could become the smartest financial move you ever make. Understanding cash flow is easily calculated by finding the difference between the investment property income and expenses.
CASH FLOW = Total Income – Total Expenses
Another method of calculating cash flow over a longer time span is to calculate your annual cash flow as a percentage of total cash invested. For example, a rental property achieving an annual cash flow of $20,000 after an initial investment of $200,000 will have a 10 percent positive cash flow.
Cash flow is a handy way to verify your financial position and can also be a useful means of forecasting your future with a degree of certainty. Mortgage House offers a range of free calculators for ascertaining your true financial position for every type of real estate investment, and when you are ready to make your next move, contact us to help you make the best possible start.