Positive cash flow is the lifeblood of successful property investment. Here's how to manage it effectively.
Understanding Property Cash Flow
Cash Inflows
- Rent payments
- Security deposits
- Late payment fees
- Additional services
Cash Outflows
- Mortgage payments
- Service charges
- Maintenance costs
- Insurance
- Management fees
- Utilities (if included)
Calculating Net Cash Flow
Net Cash Flow = Total Income - Total Expenses
Aim for consistent positive monthly cash flow with reserves for unexpected expenses.
Improving Cash Flow
Increase Income
- Optimize rental rates
- Reduce vacancy periods
- Add value-add services
- Consider furnished rentals
Reduce Expenses
- Negotiate service charges
- Preventive maintenance
- Energy efficiency improvements
- Shop around for services
Timing Management
- Align rent collection with payment obligations
- Build cash reserves
- Plan for large expenses
- Manage PDC schedules carefully
Cash Flow Challenges
Seasonal Variations
Some months have higher expenses (AC servicing in spring, major repairs after summer).
Vacancy Impact
Even one month vacancy significantly impacts annual cash flow.
Unexpected Repairs
Major repairs can eliminate several months' profit.
Cash Flow Forecasting
Create projections:
- Monthly cash flow estimates
- Annual expense budgets
- Vacancy contingencies
- Capital expense planning
ProperLE provides real-time cash flow dashboards and forecasting tools for your entire portfolio.