A real estate cash flow statement provides a detailed overview of your income and expenses for your investment property. It helps you track your cash flow, identify areas where you can save money, and make informed decisions about your investment. There are many different real estate cash flow statement templates available online, but it’s important to choose one that is easy to use and understand. Also, make sure that the template aligns with Generally Accepted Accounting Principles (GAAP) if you want to compare your cash flow with other real estate companies.
Once you’ve chosen a template, the next step is to gather your financial data. This data can be found in your bank statements, credit card statements, and other financial records. Once you have your data, you can begin to fill out the cash flow statement. The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities.
Operating Activities
The operating activities section of the cash flow statement includes all of the cash that you generate from your rental property. This includes rent income, security deposits, and other miscellaneous income. It also includes all of the expenses that you incur in operating your property, such as mortgage payments, property taxes, insurance, repairs, and maintenance.
To calculate your net operating income, you simply subtract your operating expenses from your operating income. Your net operating income is the amount of cash that your property generates after all of your expenses have been paid.
The operating activities section of the cash flow statement is the most important section, as it provides you with a clear picture of how your property is performing. By tracking your operating cash flow, you can identify areas where you can improve your profitability.
Investing Activities
The investing activities section of the cash flow statement includes all of the cash that you spend on acquiring or improving your investment property. This includes the purchase price of the property, as well as any expenses that you incur in making repairs or renovations.
The investing activities section of the cash flow statement is important because it shows you how much money you are investing in your property. By tracking your investing cash flow, you can make informed decisions about how to allocate your resources.
Financing Activities
The financing activities section of the cash flow statement includes all of the cash that you receive or pay out for financing your investment. This includes mortgage payments, interest payments, and refinancing costs.
The financing activities section of the cash flow statement is important because it shows you how much money you are spending on financing your property. By tracking your financing cash flow, you can identify areas where you can save money.
Conclusion
The real estate cash flow statement is a valuable tool for any real estate investor. By tracking your cash flow, you can identify areas where you can save money, improve your profitability, and make informed decisions about your investment.
If you’re not already using a cash flow statement, I highly recommend you start today. Many online programs, such as Stessa, can assist you in creating a comprehensive financial picture of your rental properties. Once you start tracking your cash flow, you’ll be amazed at how much you can learn about your investment.
