If you’re a real estate investor or plan to become one, a rental property cash flow spreadsheet is essential to your success. Here’s what a cash flow spreadsheet is, and how to use it to maximize your income. Don’t throw away the manual, just read on.
A cash flow spreadsheet, also known as a rental property cash flow spreadsheet, is a large, detailed document that includes every purchase and sale transaction for your rental property. It will show you every purchase, and when it occurred, and how much was paid and how much remained to be paid. It also shows where all the money goes, and at what rate. All of this information will make your future planning decisions easier.
Using a Cash Flow Sheet to Estimate Rent Payments
First, you need to decide whether you are looking to buy an entire house, or just a particular area. If you want to buy an entire home, you will use the same spreadsheet that you would if you just wanted to buy a particular part of the house.
Once you’ve decided where you are going to buy, look through the first few sections and figure out the main categories of transactions. You may find that a certain category is broken down into several subcategories, depending on the nature of the transaction. Look for this information, and make sure that each category has a corresponding category name, so that you know where you need to look.
You should always have your own spreadsheet, so that you can be aware of what is going on. For example, if you’re going to buy a new place to live, you can easily enter that purchase into your spreadsheet and figure out your future income. Also, the better educated you are, the more accurate your calculations will be.
Now you will enter every purchase that you made for things like furniture, furnishings, appliances, rent, and any money you received for personal expenses. These could include any money you received for spa treatments, meals out, business trips, or gifts from family members. This could also include those large purchases like a new car.
Now it’s time to figure out the necessary expenses. These are all the things that happen in your day-to-day life that require money, like rent, utilities, insurance, mortgage payments, credit card payments, and any other necessary expenses.
Now you are ready to decide what is left over. This is the part where you can figure out what is left over, and how much you need to live off of. At this point, you’ll probably want to keep the sheet all together, but if you have a lot of money to put into your account at this point, you should get a separate one and work on it.
Once you have completed this section, now you can begin your cash flow calculations, again by having a cash flow spreadsheet to show you how much money you have left. If you have a large amount of money left, you’ll likely need to spend a lot of time working on this section.
Now that you have completed your cash flow spreadsheet, you should be able to figure out your current market value of your rental property. If you haven’t done this before, you’ll probably have to add your current market value to your monthly payment to get your monthly net income.
Finally, you should have a cash flow spreadsheet showing you what you are getting paid, but you still haven’t figured out where the money is going. This is when you have to figure out where the money is going, and you can do this with your cash flow spreadsheet, but make sure that you don’t make the assumption that it all goes to the rent.
If you want to be a real estate investor, you need to make sure that you understand the market first. Make sure that you take a hands-on approach to your accounting, and that you keep a working cash flow spreadsheet on hand. PLEASE READ : rental property business spreadsheet
