Sample Cash Flow Breakdown

Nearly one in four landlords report that unexpected expenses wiped out part of their rental income (A 2023 Rentastic analysis Rentastic). Good news, mastering this calculation is easier than it sounds. With a clear process, you’ll know exactly how much money your rental property really generates each month.

In this ultimate guide, we’ll show you how to calculate rental property cash flow clearly and consistently. You’ll learn which numbers to gather, how to plug them into a simple formula, and what ratios to watch. Plus, we’ll walk through a sample breakdown so you can see the math in action.

Understand cash flow importance

Cash flow is the money moving in and out of your property over a set period. When it’s positive you’re making profit after covering bills, and when it’s negative you’re subsidizing ownership. A steady, positive cash flow lets you:

• Reinforce your financial cushion, so surprises don’t derail your plans  
• Reinvest in upgrades or new properties, fueling portfolio growth  
• Pay down debt faster, improving your leverage and credit profile  

A clear view of your cash flow gives you freedom to make strategic decisions instead of reacting to surprises. Good news, once you learn the process, it becomes second nature.

Define cash flow components

Before you start crunching numbers, it helps to know what goes into your calculation. Cash flow has two main parts:

1. Cash inflows – all money you collect  
2. Cash outflows – all money you spend  

Cash inflows

Your primary income stream is rent, but don’t overlook:

• Base rent from tenants  
• Late fees, pet fees, parking charges  
• Laundry or vending machine revenue  
• Other ancillary income (storage, pet deposits released)  

Accurate rent projections are your compass for forecasting cash flow. Data-driven rent estimates help you set competitive rates.

Cash outflows

Outflows include everything you pay for to keep the property running:

• Mortgage or loan payments (principal and interest)  
• Property taxes and insurance premiums  
• Maintenance and routine repairs (allocate 1–3% of property value annually Rentastic)  
• Property management fees (if you outsource)  
• Utilities (if landlord-paid)  
• Vacancy and credit loss (months without tenants)  
• Capital expenditures (major upgrades like roofs, appliances)  
• Emergency fund contributions for surprise costs  

Building a clear list of expenses helps you avoid surprises and keep your forecast realistic.

Calculate cash flow step by step

Follow these five simple steps to arrive at your net rental cash flow. You can also visit our tool page to calculate rental property cash flow automatically once you understand the basics.

Gather accurate income data

1. Choose a period (typically one month).  
2. Add up all rent payments and fees collected.  
3. Subtract vacancy loss (project a realistic percentage).  

Example
If you collect $5,500 in rent and $150 in fees, and assume 5% monthly vacancy, your total inflows are  

• Rent and fees: $5,650  
• Vacancy loss (5%): −$283  
• Net inflows: $5,367  

Sum up operating expenses

List every regular cost for the same period:

• Property taxes: $450  
• Insurance: $120  
• Maintenance reserve (1% rule on $200,000 home): $167  
• Management fee (8% of rent): $440  
• Utilities: $100  

Total operating expenses: $1,277

Deduct financing costs

Financing often represents a large chunk of outflows:

• Mortgage payment (principal + interest): $1,200  

If you use a DSCR loan, your lender may require that your net operating income covers 1.2 times your mortgage payment to earn better interest rates (Rentastic).

Subtract capital expenditures

Major upgrades don’t happen every month, but you should reserve for them:

• Roof replacement fund: $100  
• Appliance overhaul reserve: $50  

Total capex reserve: $150

Calculate net cash flow

Now plug into the basic formula:  

Net cash flow = Net cash inflows − (Operating expenses + Financing costs + Capex reserves)

Using our example:  

• Net inflows: $5,367  
• Outflows (1,277 + 1,200 + 150): $2,627  
• Net cash flow: $5,367 − $2,627 = $2,740  

A positive result means extra money in your pocket. If it’s negative, you know exactly how much you need to adjust.

Explore key financial ratios

Beyond raw cash flow, a few ratios give you deeper insight into performance and lender requirements.

Debt service coverage ratio

Debt service coverage ratio (DSCR) = Net operating income ÷ Debt service

If your property nets $4,800 annually before debt and your mortgage costs $4,000 per year, your DSCR is 1.2. Lenders often require a DSCR of at least 1.2 to qualify for better rates.  

Free cash flow

Free cash flow (FCF) shows how much cash you have left after covering all costs and reinvestment needs:  

FCF = Net cash flow − Mandatory reserves  

A healthy FCF means you can buffer surprises or reinvest without tapping other funding.

Profit and loss margin

P&L margin = Net operating income ÷ Gross income

A 20% margin indicates you keep 20 cents of every dollar after covering operating costs. Use monthly P&L statements to spot trends and optimize your budget.

Review sample cash flow breakdown

Seeing numbers in a table can make the process even clearer. Below is a sample for one month:

This breakdown highlights where your money goes and what you keep.

Automate cash flow monitoring

Manual tracking eats time and can introduce errors. A 2025 Rentastic study showed automating your tracking can eliminate up to 80 percent of manual data entry tasks each week, freeing you for more strategic planning (Rentastic Blog). Many property managers set up a system to calculate rental property cash flow automatically. Key benefits include:

• Time savings for analysis instead of data entry  
• Real-time dashboards to spot trends  
• Automated P&L and tax reports  
• Scenario planning for rent changes or expense spikes  

Good news you don’t need a finance degree to use these tools, and they quickly pay for themselves in insight and efficiency.

Quick recap and next steps

1. Understand the importance of cash flow for growth and stability.  
2. Define and list all inflows and outflows (including reserves).  
3. Follow a step-by-step calculation to get net cash flow.  
4. Explore DSCR and free cash flow to gauge financial health.  
5. Review a sample breakdown to see the process in action.  
6. Automate tracking to save time and improve accuracy.  

Ready to take control of your rental income? To dive deeper into calculators and pro tips, visit our tool to calculate rental property cash flow. You’ve got this, and the data says these small steps lead to big improvements.