Lesson 13: What is Cashflow?
In this video, I'm gonna explain what cash flow is and actually how that's different from NOI and why that's important. So cash flow is all of the revenue that remains after you pay all of your expenses and cash outflows, right? This'll make sense in a second. So here's the calculation. Take your effective gross income.
You subtract out your operating expenses, right? So that's NOI. You want to take out your debt service, right? Because that is money that's going out. So that's interest, right? So that's a true expense, but it's also paying back principle, which is not an expense. Basically you're paying yourself, but it is cash that is leaving your pocket.
So that is the calculation for cash flow. So the big difference between NOI and cash flow, like I mentioned, is debt service. It's taken into effect in the calculation because cash is leaving your pocket. Hopefully that helps. Please like, subscribe, and follow. We'll see you soon.
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