Cash flow is what actually lands in your bank account each month after all expenses. Building an accurate cash flow model requires real rent data, realistic expense assumptions, and current financing terms.
The Complete Cash Flow Model
INPUTS (from ZipMarketData API):
Median Sale Price: $325,000
2BR HUD FMR Rent: $1,600/mo
Down Payment: 20% = $65,000
Loan Amount: $260,000
Rate / Term: 7% / 30yr
Monthly P+I: $1,730/mo
INCOME:
Gross Monthly Rent: $1,600
- Vacancy (7%): - $112
Effective Gross Income: $1,488
EXPENSES:
- Management (9%): - $144
- Maintenance (1%/yr): - $271 ($3,250/yr / 12)
- Insurance (0.5%/yr): - $135 ($1,625/yr / 12)
- Property Tax (1%/yr): - $271 ($3,250/yr / 12)
Total Operating Expenses: - $821
NOI: $667/mo
FINANCING:
- Mortgage P+I: -$1,730
Monthly Cash Flow: -$1,063 (negative!)
CONCLUSION: Requires lower price, higher rent, or more down payment to cash flow
Sensitivity Analysis
The above example shows negative cash flow at $325K. To hit breakeven, you need one of: 30% down payment, purchase price of $240K, or monthly rent of $2,200+. Use ZipMarketData to find ZIP codes where the math actually works at your target price point.