How to Calculate Cash Flow for Cooperative Apartments

A cooperative apartment's cash flow helps you determine its financial health.

A corporation owns a cooperative apartment building, with the shares of the corporation distributed to the owners of the apartment units. The number of shares each unit owner has depends on the size and value of his apartment unit. The corporation may also rent out apartment units. The corporation that owns the apartment building therefore earns income from rent and sales. After deducting the corporation's expenses from income, you will obtain the cooperative apartment's cash flow.

Instructions

1. Multiply the number of apartments by the monthly rental rate to obtain the monthly rental income. If the building's apartment units have varying rental rates, add up all these figures instead to get the monthly rental income. Multiply the monthly cash flow by 12 to get the annual rental income of the cooperative apartment.

2. Multiply the amount of monthly maintenance fee each unit pays by the number of units in the building to get the total maintenance income that the corporation gets each month. If the units pay varying rates, add up all the different fees instead. Multiply this figure by 12 to get the annual maintenance income of the cooperative apartment.

3. Add up all the expenses of the cooperative apartment for the year. The average cooperative apartment's expenses include property management, repairs and maintenance, insurance, trash pick-up, landscaping and utilities.

4. Add up the sales figures of all the units sold during the year to obtain the annual sales income of the cooperative apartment.

5. Calculate the total sales expenses that the corporation pays during the year. These expenses include renovations costs to bring the apartment units to marketable standards, attorney charges, closing costs and taxes.

6. Add up the annual rental income (Step 1), the annual maintenance fee income (Step 2) and the annual sales income (Step 4). Deduct the annual maintenance expenses (Step 3) and the annual sales expenses (Step 5) from this figure to obtain the annual cash flow of the cooperative apartment.

References

• Columbia University: Real Estate Terminology
• Entrepreneur Magazine; The Appraisal of Occupied Cooperative Apartments in New York City; John Cicero; July 2002
• Marcus & Millichap Capital Corporation: Apartment Loan Sizer