How Much Cash Flow Do You Need For A Rental To Make Sense in FLORIDA?

If you’re thinking about investing in a rental property, you might be weighing the costs and potential income. If so, you’re probably wondering: “How much cash flow do you need for a rental to make sense in FLORIDA?” This is a great question, and the answer might surprise you…

Cash flow. It’s the reason why most real estate investors acquire rental property! So perhaps you’re wondering how much cash flow do you need for a rental property to make sense in Fort Myers – GREAT question.

The answer is challenging to give (because the number is different for everyone) but here a few ways to figure it out for yourself…

How Much Cash Flow Do You Need For A Rental To Make Sense In FLORIDA?

Many investors want to start out of the gate with a highly profitable cash flowing property, but that’s not always the case. Millionaire cash flow real estate expert Robert Kiyosaki’s first real estate investment was just $25 cash flow positive each month! Today, Kiyosaki is very successful and wealthy.

So the first thing you need to do is make sure your expectations are realistic.

Instead of focusing on a single large cash flow amount each month, think of it this way: at the end of the month will you have less money left over, will you have exactly the same amount, or will you be profitable?

What’s interesting is: all of these are viable options…

Cash flow negative

Having expenses exceed your cash flow can be a challenging situation, especially in financial management and investing. While many investors aim to maintain a positive cash flow consistently, there are instances where temporary negative cash flow can be manageable or even strategic. If your expenses slightly exceed your income or if this situation is short-term, it may not be as detrimental as it seems at first glance. In some cases, such as when investing in property or business expansion, taking on temporary negative cash flow could be justified if it leads to future profitability or increased asset value.

However, sustaining a significant cash flow deficit over the long term is generally not advisable without a clear plan for improvement. Continuously relying on borrowing to cover expenses can lead to financial instability and increased debt burden. It’s crucial for investors and businesses to monitor their cash flow closely, ensuring that any negative trends are addressed promptly. By balancing short-term financial pressures with long-term financial goals, investors can make informed decisions to navigate through periods of negative cash flow while maintaining a sustainable financial strategy.

Cash flow equivalent

When your expenses align closely with your income each month, you’re essentially operating at a break-even point, where neither a surplus nor a deficit is incurred. This equilibrium signifies a balanced financial state where every dollar earned is matched by a dollar spent. For individuals or businesses striving to reach this equilibrium from a cash flow negative position, the immediate objective is to stabilize finances and avoid further losses. Achieving short-term equivalence suggests progress towards profitability, as it indicates that expenses are being managed within the bounds of available income. This phase can serve as a transitional period, where efforts are focused on reining in expenditures and potentially increasing revenue streams to achieve sustainable financial health.

However, maintaining this equilibrium over the long term may also reflect strategic planning, particularly in the context of real estate investments. For instance, when referring to the sale of a house, maintaining equivalence could imply a calculated decision to hold onto the property until market conditions are favorable for a profitable sale. This approach underscores a deliberate strategy where temporary financial balance is leveraged towards a future gain, aligning with broader financial goals such as maximizing returns on investments. Ultimately, whether striving for short-term stability or positioning for future gains, achieving and sustaining equivalence signifies a prudent management of resources aimed at achieving financial objectives.

Cash flow positive

This is when your expenses are less than the income you earn each month on your properties and it’s a great place to be. In the words of Kiyosaki (from his book Cash Flow Quadrant), he would be willing to buy investments that were even $80 cash flow positive each month – and he’d be willing to buy as many of those as he could get his hands on. Fortunately, it’s not hard to reach this level… and beyond.

So, how much cash flow do you need for a rental to make sense in FLORIDA? Probably less than you think! After all, Kiyosaki started with just $25 cash flow positive each month and there are some scenarios where even temporarily cash flow negative investments make sense.

Want to see what cash flowing rental properties we have available? Call our office at 239-360-3176 or click here now and fill out the form.

Get More Real Estate Market Info... Subscribe Below!

Learn more about us and find other resources on buying investment properties with us. Like us, follow us, connect!

Access Local Florida Investment Property Deals...

Handyman Properties - Fixer Uppers - High Equity. *These are not on the MLS Available properties on the next page.
  • This field is for validation purposes and should be left unchanged.