Topic

Rental Cash Flow: What a Property Has to Cover

The rent a lease charges and the money that reaches an owner's account are not the same figure. Between them sit the weeks nobody is paying, the costs a tenant does not carry, a fee on what is collected, the allowances for what has not broken yet, and the mortgage payment in full.

The arithmetic is exact and it is also narrow. It says what a month leaves, never whether a property is a good one, what it is worth, or what anybody should do about it.

Start here

Three finished pages cover this subject, and they answer different questions. Start with whichever one matches yours. None of them assumes you have read the others.

  • Calculate

    Rental Break-even and Cushion Calculator

    Run the model on your own scheduled rent, vacancy assumption, owner costs, reserves and debt service. It runs entirely in your browser: UBWHY does not receive what you enter, stores none of it, and puts none of it in a link.

    Open the calculator

  • Understand

    Why Gross Rental Yield Is Not Cash Flow

    Why a property can show an attractive gross yield and still produce weak or negative monthly cash flow, what sits between the two, and what positive cash flow still does not prove.

    Read the explainer

  • Compare

    Rental break-even across cost burdens

    Seven cost burdens against three stated management-fee rates in one reference table: the break-even occupancy each requires, the vacancy weeks it leaves, and the burden at which no occupancy is enough.

    See the reference

Three different questions

Calculate
What does my own rental leave each month, and how far is that figure from zero?
Understand
Why can a property show an attractive gross yield and still produce weak cash flow?
Compare
What occupancy does a given cost burden require, and when is full occupancy not enough?

The three overlap as little as they can. The calculator computes, in currency, from figures you supply; the explainer teaches the mechanism and needs no figures at all; the comparison holds a fixed set of ratios so cost burdens can be read against each other.

Three cost burdens, from the reference set

The occupancy break-even requires at three fixed costs-to-scheduled-rent ratios, and the vacancy each leaves, with a stated 10% management fee and no vacancy assumed in advance.

60% cost burden
66.67% · 17.33 weeks
80% cost burden
88.89% · 5.78 weeks
100% cost burden
111.11% · Not reachable — break-even needs more than 100% occupancy

Outputs of a UBWHY calculation model applied to the assumptions above. They are not market data, expected occupancy, the performance of any property, or a forecast. The full reference set — seven cost burdens against three stated fee rates, with every assumption stated and the boundary where no occupancy is enough — is on Rental break-even across cost burdens.

Cash flow is a liquidity measure, not a verdict

Everything above prices one relationship: what a period's rent has to cover before the month reaches zero. Two properties with the same cash flow can differ in:

  • the purchase price, and therefore every yield and every return on capital
  • principal repayment, which reduces a debt without appearing as cash
  • property-value change, in either direction
  • tax of any kind, which is modelled nowhere in this subject
  • whether a rent is achievable, lawful or sustainable in any market
  • the timing of a vacancy, a repair or an arrears month, none of which this model places
  • whether a reserve allowance is adequate for the building it is set against
  • how long an owner can fund a shortfall out of something else

A monthly shortfall is not automatically a bad investment, and positive cash flow is not automatically a good one. Principal repayment and value change sit outside the figure entirely. Nothing on this page or the pages it links is a reason to buy, hold, let, refinance or sell anything.

Nothing here is financial, legal or tax advice, and no product, provider, platform or property is named, ranked or recommended anywhere in this topic.

What this guide covers

The three UBWHY pages above are what has been finished on rental cash flow. A new one is listed here when it is published, never before it exists and never as a placeholder for something that might.