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.
| ANNUALLY | MONTHLY | |
|---|---|---|
| Total Rental Income | $17,100 | $1,425 |
| Expenses: | ||
| Insurance | $268 | $22 |
| Mortgage interest | $6,424 | $535 |
| Taxes | $1,568 | $131 |
| Condo fee | $2,460 | $205 |
| Renter license renewal | $60 | $5 |
| Maintenance | $120 | $10 |
| Vacancy | $1,725 | $144 |
| “It’s Gonna Break” fund | $500 | $42 |
| Total Expenses | $13,125 | $1,094 |
| Cash Flow | $3,975 | $331 |
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.