Cash flow is the bottom-line measure of rental property profitability — what's left in your pocket after every bill is paid.
Cash Flow = EGI − Operating Expenses − Mortgage Payment (P&I)
Positive cash flow means the property generates income. Negative cash flow (alligator property) means you are subsidizing the property from your own funds each month.
Target benchmarks vary by strategy:
- Buy-and-hold: $100–300/door/month minimum
- STR: Higher but more variable
- Value-add: May be negative initially, positive post-renovation