Cash Flow
The money left over after all of a property’s bills are paid from its income — operating expenses, loan payments, and reserves. Positive cash flow means the property pays for itself with margin; negative cash flow means the owner feeds it. Cash flow is the recurring return, distinct from appreciation and tax effects.
Related terms
NOI (Net Operating Income)
A property’s income minus its operating expenses, calculated before loan payments, income taxes, and capital expenditures. NOI isolates how the property itself performs, independent of how it is financed or owned. It is the numerator in cap rate and DSCR, which makes it the backbone of most income-property analysis.
Cash-on-Cash Return
Annual pre-tax cash flow divided by the total cash actually invested — down payment, closing costs, and upfront repairs — expressed as a percentage. Unlike cap rate, cash-on-cash accounts for financing, so it shows what the investor’s own money is earning. Two identical properties can have very different cash-on-cash returns depending on the loan.
Operating Expenses
The recurring costs of running a property: property taxes, insurance, management, routine maintenance, utilities the owner pays, and similar line items. Operating expenses exclude mortgage payments and capital expenditures. Subtracting them from income yields NOI, so what counts as an operating expense directly shapes every metric built on it.