Q. What is Cash Flow?
A. Cash Flow is the total profit from an investment after all expenses are paid.
Q. What is Cash Flow Rental Property?
A. Cash Flow Rental Property is property that provides income equal to or greater than what the stock market can provide. For example, if you invested $100,000 in a mutual fund with an average annual performance of 12%, your money would increase an average of $12,000 per year.
Now imagine purchasing a home for $100,000 that rents for $1,000 per month. That home will provide $12,000 per year of income every month. Such an investment would be equal to or better than investing in the stock market, because rental prices go up, which means the monthly cash flow will increase as well. Here is an example:
Purchase Price: $50,000
Annual Real Estate Tax: $500
Annual Home Owners Insurance: $300
Annual Property Management Costs: $900
Total Income per month: $750
Average Total Expense per month: $142
Total Monthly Cash Flow: $608