Cash flow is the net amount of cash moving in and out of a business, usually measured during a specified, limited period of time. In the context of commercial real estate, cash flow is generally determined as net operating income (NOI) less capital expenditures, replacement reserves, and debt service payments. Cash Flow can be depicted as before-tax cash flow (BTCF) or after-tax cash flow (ATCF).
For example, if a property generates an NOI of $100,000 and the lender required $5,000 in replacement reserves and total debt service payments were $30,000, then the investment would generate a before-tax cash flow of $65,000 ($100,000 - $5,000 - $30,000 = $65,000).