Cash Flow

Cash flow is the amount of money remaining after a rental property owner satisfies financial obligations related to the property. Generally, this amount can be calculated by subtracting loan payments, taxes and operating expenses from the income resulting from the current rental contract. Cash flow resulting from the rental of multiple properties is often used by investors to complete repairs and renovations on all of their rental properties, thus increasing their value. Cash flow can also be used to purchase additional rental properties, giving an investor the opportunity to grow their real estate holdings and to further increase their cash flow. The yield percentage of a property can be calculated by taking the amount of money invested into the property and dividing it by the amount of cash flow generated over one year. A $100,000 investment that generates $10,000 annually is said to produce 10% yield percentage as a result of the incoming cash flow.