Review the cash flow of your existing rental properties
Rental cash flow is the money left after property expenses and debt payments, with upcoming bills and planned work still to account for. Before using that surplus or borrowing against a property for another investment, review what the existing rental properties already need.
In the archived Adapt & Thrive interview, Dalia Barsoum asks Michal Wach how investors are responding to pressure on rental cash flow. They discuss reviewing existing property costs and mortgages before taking on another project. The interview's market outlook and personal investment preferences reflect 2022, rather than a recommendation for today's buyer.
Calculate the cash available after expenses and mortgage payments
Start with rent and other income actually received. Put it beside operating costs and debt payments, then account for upcoming bills and work. A month's surplus needs context if larger costs are approaching.
Use the same period for the amounts you compare. If an expense is annual or irregular, keep that timing visible rather than treating a month without the bill as a lasting improvement.
Part of the review | Information to gather |
|---|---|
Income received | Rent and other property income, with expected amounts kept separate from actual receipts. |
Operating costs | The property's recurring costs and the dates of larger or irregular bills. |
Financing payments | Mortgage and other debt payments, including when their terms or rates may change. |
Planned property work | Costs still to be paid for repairs, improvements or a project already underway. |
Funds available | Cash available for those property costs and payments, with borrowed proceeds identified separately. |
Keep transfers and one-time financing proceeds separate from recurring rental income. This cash-flow review supports your planning; a lender’s mortgage assessment and your accountant’s reporting serve different purposes.
Illustrative calculation
Why review the properties together?
Imagine you own these two rentals and want to understand why little money is left each month. Reviewing the income and payments for each one explains what is happening across both.
Rental property A
- Monthly rent received
- $3,000
- Monthly running costs
- −$700
- Monthly mortgage payment
- −$2,600
- You need to contribute
- $300
This rental needs $300 from you each month to cover the listed costs.
Rental property B
- Monthly rent received
- $2,800
- Monthly running costs
- −$600
- Monthly mortgage payment
- −$1,800
- Money left after these costs
- $400
This rental has $400 left each month after the listed costs.
Together, the two properties leave $100 a month.
The $400 left by property B covers the $300 shortfall on property A, leaving $100. Looking only at property B would miss the pressure created by property A.
A financing review would examine whether a change could help with the payment pressure, including its fees, repayment period and interest cost. The recommendation would depend on your goals and the actual financing available.
This is a hypothetical example, not a client result. It includes only the monthly items listed; vacancy, repairs, reserves and other costs would need consideration in a real review.
Distinguish mortgage principal payments from tax-deductible expenses
A principal payment uses cash even though it is not a deductible rental expense. CRA states that mortgage or loan principal repayments on a rental property cannot be deducted. That is one reason the tax return alone does not describe the cash you need to carry the property.
Work with your accountant on reporting and tax treatment. For the financing conversation, bring a clear view of the income, costs and payments rather than treating taxable income and available cash as the same figure.
Review the cost and timing of planned property work
For a renovation or improvement, distinguish the work necessary to carry out the project from optional additions. Review the remaining scope, quotes and timing before spending or relying on the expected result.
The remaining budget should show costs already committed, work still to be funded and property expenses that continue if completion takes longer. A delay may require money from other properties, so review the effect on those properties as well.
Changing the scope is a project decision to assess with the appropriate professionals. It is not a reason to overlook required repairs or assume the same income will result from less work.
Check whether a sale or refinance can provide the funds you need
If another purchase depends on a sale or refinance, record the value and timing the plan assumes and the evidence supporting them. Property expenses and mortgage payments may continue while the transaction is arranged. Establish how those costs would be covered if the funds arrived later or were lower than expected.
A projected refinance is not money already arranged. If private financing is involved, consider the repayment plan and a fallback with the mortgage advisor.
Compare payment relief with the longer-term borrowing costs
A change that reduces a monthly payment may also alter the debt and its repayment period. Compare the immediate effect with the borrowing costs and debt repayments over time. Ask what has changed in the payment, balance and repayment schedule rather than judging the option by one figure.
If you may have difficulty making mortgage payments, contact your financial institution early. Available relief depends on your circumstances and can add costs over time.
Request a Portfolio Financing Review
The next step may be to stabilise cash flow, finish existing work, repay debt or prepare for another investment. State that priority before looking for a financing change.
The complimentary Portfolio Financing Review starts with your goals and reviews each property’s value, mortgage, payments and rental income, as well as the portfolio’s combined income and costs. Streetwise looks for financing opportunities that could ease payment pressure or release funds for investment. Bring current mortgage information, property income and costs, and the work or purchases you are planning. Contact Streetwise to start the conversation.
Watch the original interview
Adapt & Thrive: Expert Interview with Michal Wach
The recording includes Michal’s experience, market expectations and operational suggestions from 2022. His results, tenant strategies and forecasts are not current Streetwise recommendations or expected outcomes for another property.
