Net Profit

Net profit, also known as net income or net earnings, is a measure of the profitability of a business or investment after accounting for all costs and expenses. It's calculated by subtracting total expenses from total revenue.

In the context of real estate financial modeling, net profit would typically be calculated as follows:

Net Profit = Total Revenue - Total Expenses

Total revenue for a real estate investment might include rental income, proceeds from the sale of the property, and other income such as parking fees or laundry income. Total expenses might include operating expenses (like maintenance, utilities, property management fees, and property taxes), financing costs (like mortgage interest), capital expenditures, and depreciation.

Net profit is a crucial metric for investors because it tells you how much money is left over after all costs have been accounted for. This is the money that can potentially be distributed to investors or reinvested in the business. However, keep in mind that net profit doesn't take into account the cash flow timing or the capital structure of the investment, so it's important to consider other financial metrics as well when evaluating a real estate investment.