Quick Answer — What's Left After Every Expense?
Monthly Cash Flow = Effective Income − Operating Expenses − Mortgage Payment, where Effective Income already accounts for vacancy loss and Operating Expenses includes property tax, insurance, maintenance, HOA, and property management fees. This is the number that actually lands in your bank account each month — not gross rent, not even net operating income (NOI), but what's left after debt service too.
Worked example — healthy single-family rental: $2,400 monthly rent, 5% vacancy rate, $200 property tax, $90 insurance, $120 maintenance, no HOA, 8% management fee, $1,300 mortgage payment. Effective income = $2,400 × (1 − 5%) = $2,280. Operating expenses (including $182.40 management fee) = $592.40. Monthly NOI = $2,280 − $592.40 = $1,687.60. Monthly cash flow = $1,687.60 − $1,300 = $387.60, with a DSCR of 1.30 — comfortably above the 1.20-1.25 ratio most lenders require.
A tighter example — condo, self-managed: $1,900 rent plus $50 other income, 6% vacancy, $180 tax, $75 insurance, $100 maintenance, $275 HOA, 0% management fee (self-managed), $1,300 mortgage. Effective income = $1,833. Monthly cash flow comes out to −$97, with a DSCR of 0.93 — below 1.0, meaning the property's NOI alone doesn't cover the mortgage payment, even without paying a management company.