Finance
What is 'cash flow from operations' in real estate investment versus 'equity reversion'?
AThey are the same concept; the terms are used interchangeably
BCash flow from operations is ongoing income during ownership; equity reversion is the net proceeds received when the property is sold✓ Correct
CCash flow is the rental income before expenses; equity reversion is the property's appreciation
DCash flow is measured annually; equity reversion is measured over the full holding period
Explanation
In real estate investment analysis, total returns come from two sources: cash flow during the holding period (net operating income minus debt service) and equity reversion (net proceeds from the eventual sale—sale price minus mortgage payoff, selling costs, and taxes). Discounted cash flow (DCF) analysis in Illinois commercial real estate captures both components to measure total investment return.
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