Levered Cash Flow

Levered Cash Flow: In the context of real estate financial modeling, levered cash flow (also known as after-debt cash flow or cash flow after financing) is the amount of cash flow that remains after all operating expenses and debt service payments have been made.

Levered cash flow is calculated as the Net Operating Income (NOI) minus any debt service payments (including both interest and principal repayments) and capital expenditures. This is the cash flow that is available to equity investors (owners of the property) and represents the actual cash return on investment that these investors can expect to receive.

Levered cash flow is an important metric in real estate financial modeling because it allows investors to understand the income generating potential of a property after accounting for the cost of debt financing. This is particularly important for investors who use a significant amount of debt to finance their real estate investments, as the cost of debt can have a significant impact on the net cash return to equity investors.

It's important to note that levered cash flow does not include any potential tax benefits or costs associated with owning real estate, such as depreciation or capital gains taxes, which are typically accounted for separately in a real estate financial model.