Once you have determined the perfect city and community for your income producing property, you may need to determine the return on your investment (ROI). Investors typically use a ‘Cash-on-Cash’ return calculation to determine the feasibility of a particular real estate investment. This calculation takes into consideration all the costs and income of a property to measure the annual return in relation to the mortgage payments. Cash-on-Cash return is considered one of the most important ways to understand ROI of a real estate investment.

Rental Property Cash Flow Analysis

Table 1.2 Rental Property Cash Flow Analysis*

Monthly Opertating Income:

Number of Rental Units:

#

Average Monthly Rent Per Unit:

$

Total Monthly Rental Income:

$

Other Monthly Income
(parking, etc.):

$

Gross Monthly Operating Income:

$

Monthly Opertating Expenses:

Property Management Fees:

$

Repairs and Maintenance:

$

Trasnsient Occupancy Tax Rate (TOT %):
Usually 10% -13% of all rental income

%

$

Booking Fees %:
Usually 10% of all bookings

%

$

Real Estate Taxes:
Usually 1.5% of purchase price

%

$

Rental Property Insurance:
Usually 0.4% of purchase price

%

$

Homeowners/Property Association Fees (HOA Fees):

$

Replacement Reserve:

$

Utilities:

$

Pest Control:

$

Accounting and Legal:

$

Monthly Operating Expenses:

$

Net Operating Income:

Total Annual Operating Income:

$

Total Annual Operating Expenses:

$

Annual Net Operating Income:

$

Capitalization Rate and Valuation:

Desired Capitalization Rate:

%

Property Valuation (offer price):

$

Actual Purchase Price:

$

Actual Capitalization Rate:

$

Loan Information:

Down Payment:

$

Loan Amount:

$

Aquisition Cost and Loan Fees:

$

Lenght of Mortgage (in years):

#

Annual Interest Rate:

%

Initial Investment:

$

Monthly Mortgage Paymnet (PI):

$

Annual Interest Paid:

$

Annual Principal Paid:

$

Total Annual Debt Service:

$

Cash Flow and NOI:

Total Monthly Cash Flow (before taxes):

$

Total Annual Cash Flow (before taxes):

$

Cash on Cash Return (ROI):

%

Investors need to determine what a good Cash-on-Cash return would be. Some consider a 4-8% ROI a great investment while others will not even consider a property with less than a 15% Cash-on-Cash return. Each investor has individual need for an income property and therefore should choose a property based on the return that suits their needs. Determining the risk you are willing to take on market fluctuations, vacancies and the amount of money invested is of paramount concern to investors. Sage advice from seasoned investors is to never invest more than you can afford to loose and always talk to a CPA before investing in real estate.

* All information in this guide and Table 1.2, while believed to a moderately fair depiction of rental rates at the time of publication the numbers in this table are for example/educational purposes only and only serve to show how to fill out a cash flow analysis. The rental market fluctuates daily, seasonally, and therefore the information is not guaranteed to be accurate by the Jelmberg Team, Inc, Keller Williams Realty or any agent, employee or contractor thereof. Real estate investment carries significant risk and all information and advice from any source should be independently verified by multiple professional sources beyond a real estate agent. Please verify calculations and seek professional assistance by a registered CPA before making any financial decisions.