Yield tells you whether a property is a good investment. Cash flow tells you whether you can afford to keep it. They are not the same number, and confusing them is how landlords with "great" properties end up selling in a panic.
In short: cash flow is the money left in your account after every bill the property generates is paid — mortgage, running costs, and reserves included. A €1,100/month flat with a €620 mortgage and €180 of monthly costs throws off about €240 a month in positive cash flow. Rent that doesn't cover its own outgoings is negative cash flow, and negative cash flow has a clock on it.
What cash flow actually is
Cash flow is brutally simple: money in, minus money out, over a month.
Monthly cash flow = rent collected − (mortgage + running costs + reserves)
Money in is the rent you actually collect — not the rent on the lease, the rent in the bank. Money out is everything the property costs to run, whether or not the tenant ever sees it.
What comes out
The outgoings that eat cash flow, in rough order of size:
- Mortgage payment — usually the biggest single line
- Management or letting fees — if you don't self-manage
- Insurance, service charges, and property taxes
- Maintenance — budget for it monthly even though it arrives in lumps
- Void reserve — the weeks between tenants when rent is zero but the mortgage isn't
A worked month
| Line | Monthly |
|---|---|
| Rent collected | €1,100 |
| Mortgage | −€620 |
| Management (8%) | −€88 |
| Insurance + costs | −€90 |
| Maintenance reserve | −€60 |
| Cash flow | €242 |
That €242 is the real number. It's what absorbs a boiler repair, a month's void, or a rate rise — and what compounds into your next deposit if nothing breaks.
Cash flow is not yield
"Yield decides whether to buy. Cash flow decides whether you can hold." — PropFlow
A property can show a healthy 6% yield and still bleed cash every month if the mortgage is large enough. Yield is measured against price; cash flow is measured against your bank balance. You buy on yield, but you survive on cash flow.
Protecting your cash flow
- Stress-test the mortgage at a higher rate before you buy — cash flow that only works at today's rate isn't cash flow, it's luck.
- Keep a reserve of three to six months of outgoings per property.
- Price voids in: a two-week gap once a year is roughly 4% off your rent.
- Track collected rent, not billed rent — arrears are a cash-flow problem before they are anything else.
Key takeaways
- Cash flow is rent collected minus every outgoing, including a maintenance and void reserve.
- A property can carry a strong yield and negative cash flow at the same time.
- Negative cash flow is survivable briefly and fatal if ignored — always keep a reserve.
- The rent that matters is the rent you collect, not the rent on the lease.
Run your numbers
Cash flow starts with the mortgage, so start there: work out the real payment on the mortgage calculator, then check the return it leaves on the rental yield calculator.
Once the property is let, PropFlow tracks the rent you actually collect against the costs you actually pay — so the cash flow you see is the cash flow in the bank, not the one on the spreadsheet. When you're holding more than a couple of units, compare the PropFlow plans before month-end reconciliation becomes your weekend.