Cash flow
The money left each month after collecting rent and paying all expenses, including the mortgage. Positive cash flow means the property pays for itself with some left over.
Also called: monthly cash flow, positive cash flow, negative cash flow
Related terms
A property's yearly income minus operating expenses, before mortgage payments and income taxes. It is the base number for cap rate and many commercial valuations.
The ongoing costs of running a property, such as taxes, insurance, repairs, management, utilities and HOA dues. They do not include mortgage payments or major capital improvements.
Yearly pre-tax cash flow divided by the cash you actually put in, such as the down payment, closing costs and rehab. It shows the return on your own money when using a loan.
The share of time or units a property sits empty and earns no rent. Investors budget a vacancy allowance, often 5% to 10%, when estimating income.
Real estate bought to rent to tenants for income rather than to live in. Lenders, insurers and tax rules treat it differently from a primary residence.