February 15, 2023

Calculating the Income a Rental Could Bring In

The main way to determine if an investment will be a good one is to run the numbers.

Real estate investment can be an excellent source of passive income and a great way to build long-term wealth. However, it’s important to understand the operating expenses and cash flow involved in this type of investment. To help you with this, I’ll share some key factors to consider before investing in real estate. But before I do so, if you are thinking about selling or purchasing, click this link below to talk to one of our agents and gain expert advice.

First, it’s crucial to determine your operating expenses, which include mortgage payments, vacancy rates, and maintenance costs. It can be tricky to estimate these expenses, so I recommend setting aside about 20% of your mortgage payment for potential repairs.

“Real estate investment can be an excellent source of passive income.”

Next, you need to figure out your cash flow. To do this, add your net operating expenses (including maintenance fees if you hire a property management company and any additional vacancy fees) to your monthly payment and subtract both from the potential rent you could get for the property. 

If you’re considering purchasing a property as a rental, our property management company can help you determine potential rents and whether the property will provide cash flow for you. If that cash flow is not a positive number, then it probably isn’t an investment you want to consider. Each person has their own positive cash flow number, but keep in mind that appreciation and rising rents are also factors.

I’m here to help you determine what a good investment property is. Our property management company can provide you leverage so that this can truly be a passive opportunity for you. Don’t hesitate to give me a call or send an email. I’d love to hear from you.

Calculating the Income a Rental Could Bring In

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