What determines whether cash flow from an investment is positive or negative?

The determination of whether cash flow from an investment is positive or negative hinges on the net spendable income generated by the property. This figure is calculated after accounting for all operating and fixed expenses. It reflects the actual cash that an investor can use, which is essential for evaluating the investment's viability and profitability.

Positive cash flow indicates that the income from the investment exceeds all related costs, allowing the owner to reinvest, pay down debt, or enjoy returns. Conversely, negative cash flow suggests that expenses surpass income, potentially leading to financial losses. Therefore, understanding the net spendable income is crucial for investors to assess their property's performance and make informed decisions regarding their investments.

While other factors, such as gross income and location, play roles in the overall performance of an investment, they do not determine cash flow directly. The comparison of rent collected to operational expenses is a component of determining cash flow but does not capture the entire picture, as other fixed expenses must also be included. The sale price of the property is relevant for calculating potential profit upon sale but does not affect the cash flow generated during ownership.