Look at each property on its own, after every expense, for a full year. Rent coming in and the bank balance going up aren't enough to tell you. A portfolio can look fine overall while 1 property quietly loses money every month and the others cover for it.
2 numbers worth knowing for each property
Profit. Rent and other income, minus operating expenses (repairs, insurance, property taxes, management fees, utilities you pay, HOA dues) and minus mortgage interest. This is close to what shows up on your tax return for that property, before depreciation.
Cash flow. What actually stayed in your account after everything, including the principal part of your loan payment. A property can show a profit and still take cash out of your pocket, or the other way around.
You need both. Profit tells you whether the property earns its keep. Cash flow tells you whether it pays its own bills.
Why the answer is often unclear
Everything runs through 1 account. When rent from 4 properties lands in the same account and expenses go out of the same card, the totals are easy to see and the property-level picture is gone.
The loan payment is treated as 1 expense. Only the interest is an expense. The principal is paying down what you owe. Counting the whole payment makes every financed property look worse than it is.
Big repairs distort a single month. A $6,000 roof repair in March makes March look terrible. Looking at a full 12 months, and separating repairs from improvements, gives a fairer picture.
Escrow hides costs. If your lender pays taxes and insurance from escrow, those costs never show up as their own transactions unless someone records them from the loan statement.
Vacancy and turnover aren't counted. A unit that sat empty for 2 months and needed paint and cleaning between tenants cost real money, even if no bill arrived.
What to look at once the books are set up this way
Profit and loss for each property, monthly and for the year
Which property has the highest expenses compared to its rent
How much each property cost you in repairs over the past 12 months
Whether rent increases are keeping up with insurance and tax increases
That's the information you need to decide whether to raise rent, refinance, sell 1 property, or buy another.
Where to start
If you're not sure what each of your properties made last year, tell us where your books stand. We'll go through it on a short discovery call and you'll know what it would take to get a property-by-property view.
REVI Bookkeeping works with house flippers and long-term rental landlords anywhere in the US.
