Here’s how the numbers work for one of my rentals in Owings Mills, Maryland. This property is a condominium, so I don’t need to budget for a new roof or outside maintenance, such as landscaping and snow removal. The condo fee also covers water/sewer, and the tenant pays the only utility bill, which is electricity.
|Total Rental Income||$17,100||$1,425|
|Renter license renewal||$60||$5|
|“It’s Gonna Break” fund||$500||$42|
As you can see, the property is $331 cash flow positive each month. If the tenant renews the lease (and they usually do), there’s no vacancy cost and that $1,425 flows to the bottom line. If nothing breaks, that’s another expense that was budgeted but not incurred, which also flows to the bottom line.