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Master Your Landlord Accounting Easily
Today with Our Real Life Example PART 2

If you are new to landlord accounting, it may seem like a lot of work and trouble with all those numbers floating around. Find out how easy and straight forward accounting can be in this Part 2 of our Rental Property Accounting Guide.

Have You Read Part 1 ? If No, Click here for Part 1 of this Landlord Accounting Guide.

What is Cash on Cash Return and How do You Calculate it?

Cash on cash return is one highly useful figure for you to tell how much cash flow your rental property is earning compared to the total amount you paid for it in the first place. The formula for cash on cash is given below:

Cash on Cash Return = Annual Cash Flow (before taxes) / Total Cash Invested

Total cash invested is the total amount of money that you paid to buy your rental property. This includes the down payment, closing costs and renovation costs for bringing your rental property to a rentable condition.

An important point to remember is that your rental property taxes are not included when calculating your cash on cash return.

Step by Step Example to Calculate Your Cash Flow & Cash on Cash Return

Now let's piece everything together to see if your rental property is a cash cow with healthy cash flow or a money sucking liability:

Annual Rental Income
Rent from Tenants	+ $20,000

Annual Rental Expenses
Mortgage Payments	- $13,500
Property Repairs and Maintenance	- $ 1,200
Vacancy Loss	- $ 600
Landlord Insurance Premium	- $ 350
Legal and Agent Fees	- $ 400
Utility Bills (that you are responsible for)	- $ 500
Other Property Expenses	- $ 250
Annual Rental Cash Flow	= $ 3,200

Cost of Buying Rental Property
Down Payment	+ $10,000
Closing Costs	+ $1,500
Renovation Costs	+ $5,000
Total Cash Invested	= $16,500

Cash on Cash Return	= 3,200 / 16,500
	= 19.4%

What this cash on cash return of 19.4% means is that you are earning back 19.4% of the total cash you forked out initially every year. In other words, this rental property is a cash cow and definitely worth keeping.

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How do You Boost Rental Profits and
Improve Your Cash on Cash Returns?

After doing your landlord accounting homework, the next logical step is to work on boosting your profit figures. What are your highly recommended tips for improving rental cash flow or to rescue a money-losing rental property? Share your valuable experience with everyone here - We will love to hear your tips, comments and real life stories:

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What Our Visitors Have to Say on Boosting Rental Property Profits

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Master Your Landlord Accounting Easily Today with Our Real Life Example PART 2

How do You Boost Rental Profits andImprove Your Cash on Cash Returns?

What Our Visitors Have to Say on Boosting Rental Property Profits

Master Your Landlord Accounting Easily
Today with Our Real Life Example PART 2

How do You Boost Rental Profits and
Improve Your Cash on Cash Returns?