Monthly Rental Cash Flow
A monthly cash flow waterfall shows exactly where every pound of rent goes before it reaches your pocket. This calculator itemises each cost — mortgage, management, insurance, maintenance, and others — and shows the cumulative deduction at each step. It is the clearest way to understand the profitability structure of a rental property and identify which costs offer the most scope for improvement.
Why this matters
A waterfall view of cash flow reveals the hidden cost structure of a property in a way that a single profit figure cannot. It shows which costs dominate — and therefore where to focus improvement efforts.
Key points
- The most significant monthly cost for most landlords is the mortgage payment (often 50–70% of rent)
- Management fees are typically the second largest cost for managed properties
- Insurance and maintenance together typically account for 10–20% of rent
- Void allowance (setting aside a fraction of rent each month for void risk) is often overlooked
- Tax is not a monthly cost but should be provisioned monthly — set aside a reserve
- Review the waterfall annually and after any change in costs (mortgage renewal, fee increase, etc.)
Frequently asked questions
Should I include a void allowance in my monthly cash flow?
Yes — divide the estimated annual void cost by 12 to create a monthly provision. For example, if you expect 4 weeks of void per year on a £1,000/month property, that is £1,000 in lost rent. Dividing by 12 gives an £83/month void allowance to include in your cash flow.
Does cash flow include capital repayment?
Interest-only mortgage payments are pure interest cost. Repayment mortgage payments include both interest and capital repayment. For cash flow purposes, the full repayment mortgage payment is a monthly outgoing — even though the capital portion builds equity.
What is the minimum acceptable monthly cash flow?
There is no universally agreed minimum. Landlords in high-growth markets may accept zero or negative cash flow. A reasonable benchmark for a cash-flow-focused strategy is at least £200–£400/month per property to justify the management burden and risk.
How does cash flow differ from profit?
For interest-only mortgages, cash flow and pre-tax profit are similar. For repayment mortgages, cash flow is lower than profit because capital repayment is not tax-deductible — it builds equity but reduces available cash each month.