valuation

cash flow

Cash flow is the money left over from an income property after collecting rents and paying all operating expenses and debt service. Before-tax cash flow equals net operating income minus mortgage payments of principal and interest. Positive cash flow means the property produces income for the owner; negative cash flow means the owner must contribute money each period. Investors use it to evaluate returns alongside appreciation and tax benefits.

Exam tip
Cash flow subtracts debt service; net operating income does not. Using NOI where cash flow is required is a common math mistake.
Example
A rental has NOI of $30,000 and annual mortgage payments of $22,000, so its before-tax cash flow is $8,000.

Related terms & state variants

Sources

Source verification pending. Confirm current requirements with your state regulator.

Last verified: 2026-10-23