Cash flow is what a rental leaves you each month once every bill is paid. How much is enough depends on what that figure has to survive, and the same figure can be plenty on one house and thin on another.
Is there a standard for how much a rental should cash flow?
There’s no official number, only arithmetic about the house in front of you.
Cash flow here means what’s left after the mortgage and every running cost: property taxes, insurance, management, and money set aside for empty months, repairs and big repairs like a roof or a furnace. So a positive figure isn’t money to spend. It’s the cushion for the months that go worse than the plan.
What does the cash flow have to absorb?
Money set aside each month covers average costs, and real costs arrive in lumps.
- A longer gap between tenants. Setting aside 5% of rent plans for about 18 empty days a year. Every extra month without a tenant costs a full month’s rent. The Census Bureau’s national rental vacancy rate, the share of rental homes that are empty and for rent, was 7.3% in the second quarter of 2026. It also publishes the rate for each state and the 75 largest metro areas.
- A big repair before the fund has grown. Money set aside for big repairs builds a little each month. A $4,000 bill in the first year (an example figure) can outrun it, and the rest comes out of your cash flow or your savings.
Those savings are your second line. Lenders call them reserves, and this $250,000 rental shows how much of them a lender expects you to keep.
Two rentals that both clear $291 a month
Take two houses bought the same way: 20% down on a 30-year loan at 7%, with closing costs of 3% of the price. One costs $160,000 and rents for $1,800 a month. The other costs $400,000 and rents for $3,900. Property taxes are 1.2% of the price, insurance is $1,000 and $2,200 a year, and each sets aside 5% of rent for empty months and 10% for repairs and big repairs, and pays 8% for management.
| $160,000 house | $400,000 house | |
|---|---|---|
| Rent | $1,800 | $3,900 |
| Empty months (5% of rent) | −$90 | −$195 |
| Property taxes and insurance | −$243 | −$583 |
| Repairs and big repairs (10% of rent) | −$180 | −$390 |
| Property management (8% of rent) | −$144 | −$312 |
| Mortgage, 30 years at 7% | −$852 | −$2,129 |
| Cash flow each month | +$291 | +$291 |
These are example figures, not a forecast for any market.
Judged per door, these two are the same deal. Per door means per rental unit, so a house is one door and a fourplex is four. They don’t hold up the same way.
How much room does $291 a month buy?
The same $291 buys very different amounts of room, depending on the rent.
| $160,000 house | $400,000 house | |
|---|---|---|
| The rent can fall to | $1,422 (21% less) | $3,522 (10% less) |
| Empty days a year it can absorb | 77 | 45 |
| Cash flow each month at 7.3% vacancy, the national rate | $250 | $201 |
| A year with one extra empty month | +$1,693 | −$412 |
| Cash-on-cash return | 9.5% | 3.8% |
Both houses can lose $378 of rent before the cash flow is gone. On the cheaper house that’s a fifth of the rent. On the pricier one it’s a tenth.
Empty months hurt the pricier house more for the same reason. An extra month with no tenant costs a full month’s rent: $1,800 on one house, $3,900 on the other. In a year that goes to plan, each clears about $3,490. After an extra empty month, the $160,000 house still ends the year $1,693 ahead, and the $400,000 house ends it $412 behind.
A $4,000 repair is the one shock that costs both the same number of dollars, about 14 months of $291 either way. The pricier house’s big-repair fund does fill about twice as fast, at $195 a month against $90, because it’s set as a share of a bigger rent.
Is cash flow per door a good target?
A per-door figure is quick to compare across listings, and that’s what it’s good for. It leaves out the size of the rent the cash flow has to protect, and how much of that rent is already spoken for before anything goes wrong. Here, the mortgage, taxes and insurance take 61% of the cheaper house’s rent and 70% of the pricier one’s, and those bills arrive whether or not a tenant pays.
A fairer yardstick is the room itself: how far the rent can fall, and how many empty days the house can take, before it costs you money. On these two houses, the same $291 buys 77 days on one and 45 on the other.
What is a good cash-on-cash return on a rental?
Cash-on-cash return is a year’s cash flow divided by the cash you put in to buy, and it answers a different question: how hard your money is working. The two houses clear about the same each year, but one took $36,800 to buy and the other $92,000. That’s 9.5% against 3.8%.
There’s no official benchmark for this either. The rental calculator has its own lines: it says “This deal works” when cash-on-cash is 8% or more, income after running costs covers the mortgage at least 1.25 times, and cash flow is positive. The $160,000 house gets that verdict, and the $400,000 house gets “Cutting it close” instead. For how this return differs from cap rate, see one house bought four ways.
How do you work out the right cash flow for your house?
Start from the house, not from a target.
- Run it in the rental calculator with every cost in, including management and the set-asides. Seven costs a first pass leaves out are the usual gaps.
- Read the break-even. The calculator’s “What breaks it” panel names the input closest to sinking the deal and the value where it does.
- Price one bad year. Take a month’s rent and your likeliest big repair off the year’s cash flow. If the answer is negative, the difference comes out of your savings.
- Set that against your reserves. If one bad year would empty them, the deal depends on nothing going wrong.