Operating Expenses and Cash Flow

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Hey Terry here,

One of my students was confused by “Operating Expenses” for a rental property.  First off so were all clear “We Do Not Manage Property” just needed to make that quick statement, but as with any operating business, we will have income and we will have some expenses.

Its really important to understand what is normally included in operating expenses for a rental property.

What messes up most investors investors is what is NOT included meaning “The Mortgage.”  Since a monthly payment is necessary in non-cash purchases, the “Debt Service” as it is called, is a major component of Cash Flow…  Positive or Negative.

The true goal of a real estate investment is to have it be a success… Which means to have it Positive Cash Flow, while also realizing the other benefits of real property ownership and investment.

These include but not limited to:

Appreciation in Value, Depreciation to an Extent and Cash Out Refinance Options.

However, when you’re evaluating possible rental property purchases, and you see a figure in the financials for operating expenses, there isn’t any Mortgage Payment in that number.

Why?

Because you’ll not only have to pay those expenses, but also your principal and interest payments as well. So, be sure to analyze the “Cash Flow” of the investment very carefully my friend.

To learn more click here

For a Very Limited Time I actually pay you to come to my upcoming event… click the link above to get all the details.

BONUS: You also get my Master Lease Option Made Easy Bonus for free just for attending the Event (Value $397) go check it out, there’s a video waiting there for you… if you hurry!

Have a great day and well see you soon.

To your success,

Terry

One Response to “Operating Expenses and Cash Flow”

  1. Edwin says:
    March 11, 2010 at 11:02 am

    Terry,

    Hey, I came to your seminar this March 5th and it was great Thanks! At the end of the seminar you asked if we had anything we’d like to see in the future on your blog or the “Inner Circle” and I so have a suggestion. I would like to know if you can create a video on how to use your Cash Flow Evaluator software just so we can see if we’re inputting all the numbers in correctly. If you did this I would be so awesome!

    Aloha,

    Edwin

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