Actual Example

Annual Gross Income:
Property rents for $1,500/mo. Annual Income is $18,000.

Annual Expenses:
Total of Property Taxes, Insurance, Maintenance, Utilities, Upkeep, & Property Management.
Total in 2015 was $7,000.

Net Operating Income (NOI) = Income – Expenses

$18,000 – $7,000 = $11,000

Debt Service (Monthly Mortgage Payment):
Monthly mortgage payment is $650; the annual total is $7,800.

Positive Cash Flow = Net Operating Income – Debt Service

$11,000 – $7,800 = $3,200.

Profit on this house is $3,200 per year or $266.67/month.

Remember, this is just one example. There is risk involved in any type of investment, including real estate. However, relying on professional advice and people who have expertise with a given market can greatly reduce risk and increase the likelihood of positive returns on your investment.

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