Cash Flow Statement

A cash flow statement reports the cash that came in and went out over a period, split into operating, investing and financing activities. A rental's NOI maps to the operating section. The loan and any capital improvements sit in the financing and investing sections.

For the default house, the operating section shows rent collected less taxes, insurance, management and repairs paid. The financing section shows the mortgage payment, split into interest and principal. The investing section shows any roof, HVAC or remodel spending.

Small landlords rarely prepare a formal statement, but the three-way split is a useful check. If a seller's NOI includes loan payments or new appliances as operating costs, move them to the right section. NOI should only reflect the operating activity.