The Cash Flow Analysis for Our Rental Property at Year End 2015

It’s time once again to do our annual rental property cash flow analysis.


To see 2014 and before, visit the link at the bottom of the post.

Cash Flow Analysis | Rental Property | Landlord | Real Estate Investment | Real Estate InvestingDo you own or want to own rental property? Take a look at PT's complete analysis of his rental property for 2015. This gives a great idea for what to expect for costs, repairs, leases, and revenue.

Did we make money this year? Is the investment still worth it? What needs to change in 2016? These questions and more will be answered in our annual review.

A little background…we purchased the property, a townhouse, back in 2007. It was our first home. We lived in for almost five years before deciding it was time for a bigger place with a yard. We moved across town to another neighborhood.

Instead of selling the house, we decided to try to keep it as a rental property. It’s been a complete DIY process for us. We prepared the house for rental, we listed it ourselves, we vetted tenants, we signed agreements, and we collect rent.

We’ve been through a couple of tenants over the last four years. Both have been a pleasure to work with.

As for 2015, it was a quiet year on the rental front. Our tenants agreed to another year (resigned in April). We dealt with minimal repairs and maintenance. We did, however, face significant increases in our property taxes. Home values are rising in this area. Overall that’s a positive. But it will require us to ask our tenants for more rent in 2016. That will be interesting. Alright, on to the numbers.

2015 Cash Flow Analysis

2015 Rent Collected

1,875.00 January Rent
1,875.00 February Rent
1,875.00 March Rent
1,875.00 April Rent
1,875.00 May Rent
1,875.00 June Rent
1,875.00 July Rent
1,875.00 August Rent
1,875.00 September Rent
1,875.00 October Rent
1,875.00 November Rent
1,875.00 December Rent

Total Rents Collected $22,500.00

Expenses Paid

$10,108.44 Mortgage Payments for 12 Months
6,157.48 Property Taxes (These went up by $1,500 in 2015!)
2,100.00 HOA Dues for 12 Months (It’s a townhouse, so this pays for lawn care, outside insurance, and the pool)
622.61 Insurance (Condo policy through Allstate)
353.00 Air Conditioning Repair

Total Expenses Paid $19,341.53

Total Cash Flow $3,158.47

In total, it was a great year. Revenue was solid. Expenses were reasonable and not unexpected. I do have some work to do when it comes to revisiting our insurance policy (it went up by +$100). And I’ll need to consider a rent increase due to the significant rise in property taxes.

If you look at what we originally “invested” in this property ($41,796) at the time we converted it to a rental, our annual return was 7.6%. Not bad.

Another way to look at this property though is to compare the return to the overall current cash value. Zillow says the unit is worth $290,250. We owe $146,225 on the property.

So if we sold it, we would free up $144,025 in cash (this ignores taxes on the sale and depreciation recapture). If you compare our annual cash flow to this value, you get a significantly smaller return of 2.2%.

Said another way, because we aren’t selling this property, we are settling for a small return on our money. Of course, there are other factors to consider, like the effect on taxes (which is very positive) and the diversification of our investments.

I don’t think we’ll be selling anytime soon. But I think it’s good to know where we stand, and I’m thankful we have options.

What do you think of the year we had? What would you do about the rental increase? How would you handle it? And what do you think of my secondary cash flow analysis?

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Last Edited: January 18, 2017 @ 12:35 pmThe content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!


  1. HullFinancial says:

    Personally, I aim to have a little more cash flow in my properties, as the insurance will drag you down a little further and you’ll probably continue to have some maintenance costs. Still, if you can be pretty close to CF breakeven pre-tax, then you’ll wind up in the good when it’s all said and done, since you’re not having to bump into the standard deduction for mortgage interest given that it’s a rental. It’s a heck of a lot better than selling for a loss. If you can hold onto it (and keep it rented out) long enough, then you’ll either a) pay off the mortgage and have nice positive CF, or get back to at least breakeven on the capital gain of the sale.
    A potential topic to cover, if you haven’t already, would be the depreciation recapture rules on the sale of a rental property. A lot of people aren’t aware of it and certainly don’t understand it.

    • @HullFinancial What have you found is your vacancy rate across your properties? Obviously I was affected by the 1.5 months (effectively 3 months if you extrapolate) vacancy. I’m hoping to improve upon that in 2013 and see a nice positive cash flow.
      Now don’t go giving me work to do. I studied those rules once, but you know I’ve since forgotten them. Seriously, thanks for the push.

      • HullFinancial says:

        @Philip Taylor On the Virginia property, our vacancy is 14%. We refused to let pets and opened it up in the late fall, when few people were looking to rent – or, at least, few people without pets. In our Texas properties, the rate is a touch below 8%. We have a great property manager who keeps them filled, and a great working relationship with her where she birddogs properties for us and has renters lined up as soon as we can close on the property and get it into move-in condition.

  2. This is great Phil:-)  I will pass it onto my son who has a basement suite rented out…..
    I’m sure he will find it interesting

  3. @ptmoney Is that your first one? How have you enjoyed it so far? Does it make you more/less interested in doing more?

  4. I think investing in rental property is a wise decision.  And it looks like it won’t take long until it is profitable for you. My husband and I would love to rent out property in the future as well as we think it’s a good way to diversify our investments, instead of having everything in mutual funds, etc.  Glad things are working out for you so far.

  5. Does your mortgage include principal payments? or is it an interest only?
    If it is a fully amortized loan then you are probably asset positive

  6. moneystepper says:

    Pretty good looking figures there – 10.2% return is certainly impressive

  7. I am about to rent out my Denver condo for the first time. I hope I end up with the same positive cash flow at the end of 2014 that you did for 2013!

  8. DenverEric I hope so too, Eric. My first year wasn’t as good because I took a while to onboard the tenant. But I’m glad I took my time with that because it made year 2 (and beyond hopefully) really solid.

  9. JD in Boerne says:

    How does the rent you receive impact your taxable income? I understand that your expenses can be deducted, such as repairs and taxes on the property, but doesn’t the rent collected increase your income and essentially cost you money as you pay taxes on that income?

  10. JD in Boerne Your taxes are never more than what you earn. Assuming you have a 25% tax rate, if your net income on the rental property is $5,000 for the year, you would pay $1,250 in taxes and keep $3,750 in after-tax profit.

  11. JD in Boerne This is a great question and one I intend to answer in detail when I file my taxes this year. Rental property gives you the added benefit of being able to subtract depreciation from the income. So my $4k profit will be more like a $2k loss for tax purposes once I subtract $6k in annual depreciation expense. The loss will help reduce my overall tax burden. It’s a huge win.

    • Congrats in a profitable rental property. For the purpose of income taxes, can you categorize mortgage payments as an expense?

      • Thanks, James. You can categorize the interest, insurance, and property tax portions of the mortgage payment as expense. But not the principal. Schedule E is where it all goes.

  12. Philip — Those are good numbers!
    I have learned maybe the best investment is by getting a quality tenant, and it sounds like you did!
    — Phillip H.

  13. DaveyPockets says:

    Man congrats! Just started year one of a real estate business myself and it is so cool to see you cash flowing! Don’t forget to factor in home office deductions, mileage on your car, half of on your meals, and depreciation and you return is much higher than 10%!!

  14. Great post Philip, thanks for sharing this, great read.