ScaredyCatGuide to Real Estate - Minimum Cash Flow Threshold for a Rental Property
Seeing that a rental property will produce cash flow isn’t enough. The amount of that cash flow is important too. It is even more important if you are not factoring in much for maintenance costs.
The Question is….
What is your Cash Flow Threshold?
This number will be different for everyone depending on the goals and risk appetite. There is one thing I can tell you though. There is definitely an absolute number you do not want to be below.
What is the minimum number? – $100 per month
If something is not going to cash flow at least $100 per month after you have allocated money for vacancy, maintenance and reserves, you are better off moving on to the next property. In the long run it will likely not make for a great investment.
For all the details, see the full blog post at:
https://scaredycatguide.com/rental-property-cash-flow-threshold/
Best Regards,
Good point @scaredycatguid ROI is important which relates to positive cash flow. Thanks for sharing
A good bit of financial advice. Thanks for your insight.
Thanks Ms. Rose :-)
Thanks for the advice.
Thankz for u articel...
But why $100?
The answer was expressed in the blog. Well, atleast I hope it conveyed....lol.
In the end, one surprise cost that wasn't allocated for would eat up most of the measly $100 a month and profit would become nill.
Let me clarify. Your previous posts talk about utilizing the calculator before making a purchase to make sure you are buying smart. Setting a minimum of $100 after the purchase feels like it contradicts your original statement about buying smart. So, that is why I asked why set a minimum of $100?
$100 is a bench mark for when you are analyzing a property before purchase. Basically, if one analyzes a property and after factoring in all expected cost, its not going to cash flow more than $100 then it is best to move on and find a better deal.
Additionally, the cash on cash return will likely be poor if its bringing in less than $100 a month.