What does cash flow represent in real estate investments?

Cash flow in real estate investments specifically represents the cash generated after accounting for operating expenses. This includes all income generated from the property, such as rent, minus the expenses required to maintain and operate the property, including utilities, management fees, property taxes, and maintenance costs. A positive cash flow indicates that the property is generating enough income to cover its expenses and still provide a profit, which is a crucial factor for investors assessing the property's financial viability.

Understanding cash flow is essential for real estate investors as it helps them evaluate the performance of their investments over time. A focus on cash flow allows investors to make informed decisions about property management, potential improvements, and strategies for maximizing income.