Cash flow, in a real estate context, is the money left over from a property's income after paying operating expenses, and, if the property is financed, debt service on any loans. Positive cash flow means the property generates more income than it costs to run and finance; negative cash flow means the owner has to contribute additional capital to cover shortfalls.
Cash flow differs from other return measures like appreciation or total return, since it reflects actual dollars distributed to owners on an ongoing basis rather than paper gains that only materialize at sale. For passive investors, cash flow typically arrives as periodic distributions, often quarterly, and is one of the primary reasons investors are drawn to real estate as an asset class. Properties with stable, in-place tenants and manageable debt tend to produce more predictable cash flow, while value-add or development projects may generate little or no cash flow early on, with returns instead concentrated at the eventual sale.
Further reading: Real Estate Investment Strategies for Accredited Investors in 2026
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