Add the monthly rents. Multiply by 12 for the yearly amount. If the cash flow is a projection, you have to account for potential vacancies based on the property history or the percentage for similar properties in the area.
2
Add all other income that produces cash; for example, laundry income. Do not add appreciation (a noncash gain) unless you sold (or will sell) the property that year
3
Deduct all operating expenses. This may include real estate taxes, insurance, repair and maintenance, water and sewer, fuel and electricity. The result is the net operating income, or NOI.
4
Deduct the mortgage payment -- do not deduct the portion for taxes and insurance if that is part of your payment and you already accounted for that under operating expenses. Do not count the principal pay-down (a noncash gain) unless you sold (or will sell) the property that year. The result is used for the cash-on-cash analysis.
5
Deduct capital expenditures to get the net cash flow before taxes. This amount converts into equity but still reduces your cash flow unless you sold (or will sell) the property that year.
6
Deduct the income tax amount for the net cash flow after taxes.By Nathan Heiney
Add the monthly rents. Multiply by 12 for the yearly amount. If the cash flow is a projection, you have to account for potential vacancies based on the property history or the percentage for similar properties in the area.
2
Add all other income that produces cash; for example, laundry income. Do not add appreciation (a noncash gain) unless you sold (or will sell) the property that year
3
Deduct all operating expenses. This may include real estate taxes, insurance, repair and maintenance, water and sewer, fuel and electricity. The result is the net operating income, or NOI.
4
Deduct the mortgage payment -- do not deduct the portion for taxes and insurance if that is part of your payment and you already accounted for that under operating expenses. Do not count the principal pay-down (a noncash gain) unless you sold (or will sell) the property that year. The result is used for the cash-on-cash analysis.
5
Deduct capital expenditures to get the net cash flow before taxes. This amount converts into equity but still reduces your cash flow unless you sold (or will sell) the property that year.
6
Deduct the income tax amount for the net cash flow after taxes.By Nathan Heiney