CHAPTER 3
Detailed Financial Analysis
The following discussion starts with the basic formula to derive net cash flow:
Gross Income − Vacancy and Collection Loss = AdjustedGross Income − Operating Expenses = Net OperatingIncome − Mortgage Payments and Reserves = Net Cash Flow
The chapter discusses each line item, in depth, and relates the analysis to the various types of leases that, in turn, may affect the cash flow analysis. This chapter also attempts to expand the analysis over a time line to better refine the cash flow and valuation conclusions.
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