Question

A small multifamily property generates $50,000 in rental income, $10,000 in expenses, and $25,000 in debt service. The property appreciates about $25,000 each year. What is the cash flow on this property?

Answer 1

The cash flow on this property is $15,000

Step-by-step explanation:

The computation of the cash flow on the property is shown below:

= Rental income - expenses - debt service

= $50,000 - $10,000 - $25,000

= $15,000

The property appreciated amount would not be considered in the computation part because it does not create any cash flow. So, this part would be ignored. Therefore, other items would be considered in the computation part.