Question 1

What is rental property cash flow?

Accepted Answer

Rent collected minus all monthly costs (EMI + service charges + insurance + management + vacancy reserve). Positive = property pays you each month; negative = you fund the property monthly.

Question 2

Is negative cash flow always bad?

Accepted Answer

Not necessarily. High-leverage Dubai investments often run negative cash flow in years 1-3 — return comes from principal pay-down + appreciation, not monthly cash. Acceptable if the holding-period total return justifies the early shortfall.

Question 3

How much vacancy reserve should I set?

Accepted Answer

Roughly 5-7% of monthly rent for typical Dubai apartments. Set higher (10%+) for short-let units or buildings with chronic vacancy issues.

Question 4

Should I include capital expenditures?

Accepted Answer

Yes — add a maintenance reserve of ~AED 500-1,500/month for major repairs (AC replacement, kitchen refresh, paint cycles). The calculator does not bake this in by default; use the management line item or add to vacancy reserve.

Question 5

What's a good cash-on-cash return?

Accepted Answer

For Dubai rentals: 2-4% cash-on-cash with 25% down at 5% mortgage = below market. 4-7% = solid. 7%+ = exceptional, usually low-priced properties or higher leverage.

Rental Property Cash Flow Calculator

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