ii. Income, Cash Flow & Returns

Income, cash flow, and returns describe how real estate assets generate earnings and how those earnings translate into investor outcomes. These concepts connect operating performance to valuation, financing decisions, and risk assessment.

Cash Flow Before Tax (CFBT)

Net cash generated by a property after operating expenses and debt service, before taxes.

Cash Flow After Tax (CFAT)

Net cash remaining after operating expenses, debt service, and applicable taxes are paid.

Cash-on-Cash Return

A return metric measuring annual pre-tax cash flow relative to the initial equity investment.

Debt Service

Scheduled principal and interest payments required under a loan agreement.

Distribution

Payments made to equity holders from available cash flow according to ownership agreements.

Gross Yield

Income generated by a property expressed as a percentage of its purchase price or value, before expenses.

Internal Rate of Return (IRR)

A time-weighted return metric reflecting the annualized rate of return over an investment’s holding period.

Net Cash Flow

Cash remaining after all operating expenses, capital expenditures, and financing obligations.

Return on Equity (ROE)

A measure of profitability calculated as net income relative to invested equity.

Yield

A general term describing income generated by an investment relative to its cost or value.