Net cash flow describes the amount of profits after deducting operating expenses like taxes, insurance, interest and principal. Investors are interested in knowing what the net cash flow of a company or property is because it tells them if there is money left over to go back to shareholders or to reinvest in the property. Investors may be interested in finding out what a property’s net cash flow is if they are considering acquiring the property. If, after operating expenses are paid, the net cash flow is minimal or non-existent, investors are likely to be turned off and may decline to proceed with negotiations in purchasing the property. Conversely, if a property’s net cash flow is stable and sufficient, the property may be a likely candidate for acquisition. The ideal investment property generates income even after expenses have been deducted.
