💰 How to Know If Your Rental Property Is Actually Making Money
A Simple Guide for Beginner Real Estate Investors
When you're new to real estate investing, it's easy to assume your rental property is making money—especially if rent checks are rolling in every month. But here’s the truth:
Cash in the bank doesn’t always mean profit.
Between mortgage payments, repairs, vacancies, and hidden costs, many beginner investors discover too late that their property is actually costing them money—not earning it.
In this post, you’ll learn how to measure the true performance of your rental property, using simple calculations and tools that even first-time investors can master.
🧮 Step 1: Calculate Your Net Monthly Cash Flow
Cash flow is the money you have left over after paying all your property-related expenses.
🧾 Formula:
Monthly Cash Flow = Rental Income – Operating Expenses – Mortgage Payment
📌 Example:
Rent: $1,800
Operating Expenses (taxes, insurance, repairs): $400
Mortgage (P&I): $1,050
→ Cash Flow = $350/month
💡 If you’re not tracking these monthly, it’s easy to miss when cash flow dips.
📊 Step 2: Know Your Cash-on-Cash Return (CoC)
Cash-on-Cash Return tells you how much money your investment is making based on how much cash you actually put in.
💡 Formula:
CoC Return = Annual Cash Flow / Total Cash Invested x 100
📌 Example:
Annual Cash Flow: $4,200
Down Payment + Closing Costs + Rehab: $45,000
→ CoC Return = 9.3%
✅ A solid CoC return for a beginner is usually 8–12%. Below that? It’s time to reassess.
📈 Step 3: Track Your Return on Equity (ROE)
As your property appreciates, your equity grows. But if your cash flow stays the same, your return on equity shrinks over time.
Tracking ROE helps you know when to refinance, reinvest, or sell.
🧠 Formula:
ROE = Annual Cash Flow / Total Equity x 100
This keeps you from holding “lazy” properties that tie up capital without strong returns.
🧰 Step 4: Use a Simple Tracker to Monitor Performance
If you’re not using a system to track:
Income and expenses
Repairs and vacancies
Cash flow and ROI
…then you’re investing blind.
The good news? You don’t need expensive software to stay organized and profitable.
✅ Get the Tools to Know Your Numbers
The Real Estate Investor’s Ultimate Management Kit was designed for beginner investors who want to confidently manage their portfolio—without spreadsheets from scratch or costly property software.
Inside, you’ll get:
📊 Portfolio Return Calculator
💰 Income & Expense Tracker
🧾 Tax Deduction Log
👥 Tenant & Lease Tracker
🛠️ Rehab Budget Sheet
🎁 Get instant access now and take the guesswork out of your investing.
👉 Download the Kit Here
🧠 Final Thoughts
If you want to grow your real estate portfolio and build real wealth, it starts with this question:
Is this property truly making me money?
Tracking cash flow, ROI, and equity isn’t just a numbers game—it’s how smart investors stay profitable, focused, and in control.