Pre-tax rental cash flow is effective rental income less operating expenses and financing payments. A durable budget also holds a separate capital reserve and does not count appreciation as spendable monthly cash.
Decision points
- 01
Apply vacancy before treating rent as available cash.
- 02
Separate routine maintenance from irregular capital replacements.
- 03
Stress the mortgage and non-mortgage costs together.
Use three ledgers
Keep income, recurring operating costs, and financing in separate ledgers. Add a fourth reserve schedule for roofs, envelopes, appliances, systems, deductibles, special levies, and turnover work that does not occur evenly each month.
Stress the weak points
Run lower rent, longer vacancy, higher rates, rising insurance, strata-fee changes, management, repairs, and one material capital event. A base case that survives only when every input is favourable is not resilient.
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