What does "positive cash flow" mean in real estate investing?

In real estate investing, "positive cash flow" refers to the situation where the revenue generated from a property exceeds the expenses associated with that property, resulting in profit. This means that after all operating costs, including maintenance, property management fees, taxes, insurance, and mortgage payments, are deducted from the rental income, there is still money left over. This excess income is what investors aim for, as it demonstrates that the investment is financially viable and can contribute to long-term wealth accumulation.

Having a property that is fully rented, while a positive aspect, does not guarantee positive cash flow if the rental income does not cover expenses. Additionally, an increase in the property's market value is a separate consideration related to asset appreciation rather than cash flow. Lastly, simply having a mortgage payment does not imply positive cash flow; it is the relationship between income and expenses that determines whether cash flow is positive. Hence, the emphasis on the profitability and comprehensive financial performance of the investment is what makes this concept fundamental to successful real estate investing.