Cash Flow
By Real Estate Investment on Sunday, July 31st, 2011 | No Comments
Cash flow is the amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income.
As it relates to real estate investing, cash flow is the amount of cash that a property is generating after all of the expenses and debt service is paid. This number should ALWAYS be positive. If this number is negative, then that means that the property is operating at a loss and will be taking money out of your pocket on a monthly basis. For Example:
Effective Gross Income (EGI): $100,000
(minus) Operating Expenses: $45,000
(equals) Net Operating Income (NOI): $55,000
(minus) Debt Service: $35,000
(equals) Cash Flow: $20,000
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