A rental property cash flow statement is a financial statement that summarizes the cash inflows and outflows of a rental property over a specific period of time, typically a month or a year. This statement is important for investors to understand the financial performance of their rental property and to make informed decisions about their investment.
There are many different ways to create a rental property cash flow statement, but the most common method is to use a template. A rental property cash flow statement template can be found online or in accounting software programs. Once you have a template, you can simply plug in your own financial data to create a cash flow statement for your property.
Income
The first section of a rental property cash flow statement is the income section. This section lists all of the sources of income that the property generated during the period. Common sources of income for rental properties include:
It is important to note that not all income is created equal. For example, rent is a recurring source of income that is relatively stable, while late fees are a one-time source of income that is more sporadic. When evaluating the income section of a cash flow statement, it is important to consider the stability and reliability of each source of income.
Expenses
The second section of a rental property cash flow statement is the expenses section. This section lists all of the expenses that were incurred in order to operate the property during the period. Common expenses for rental properties include:
It is important to note that not all expenses are created equal. For example, mortgage payments are a fixed expense that is due every month, while repairs and maintenance are a variable expense that can vary from month to month. When evaluating the expenses section of a cash flow statement, it is important to consider the fixed and variable nature of each expense.
Net Cash Flow
The third and final section of a rental property cash flow statement is the net cash flow section. This section simply subtracts the total expenses from the total income to arrive at the net cash flow. The net cash flow is the amount of cash that the property generated during the period.
The net cash flow is an important metric for investors to track, as it can provide insights into the financial performance of the property. A positive net cash flow indicates that the property is generating more cash than it is spending, while a negative net cash flow indicates that the property is spending more cash than it is generating. By tracking the net cash flow over time, investors can identify trends and make informed decisions about their investment.
