Are You Buying Profit - or Cash Flow?

Peleg Davidovitz

28 Sep 2025 — 1 min read

One of the trickiest questions in real estate investing is this: when you buy into a deal, what are you actually buying? The “profit” it might generate… or the cash flow?

The less intuitive answer: you’re buying cash flow.

Investors don’t usually buy “profit.” They buy a stream of inflows and outflows over time. Each payment, each receipt, gets dropped into a DCF model with timing and discount rate. That’s how you calculate IRR and NPV.

Projected profit matters—but for a different reason: it shows the expected growth in equity. A project that nets $10M adds to your balance sheet. But it doesn’t tell you if the deal itself is good or bad.

Think about two projects with the exact same profit five years out. One requires no additional capital, the other does. Same profit—but absolutely not the same deal. Only a cash-flow lens reveals the real quality of the investment.

So why do even experienced developers get confused? Because it’s natural to think: “How much extra will I have after all this?” But that ignores reinvestments, timing of cash, and the cost of money.

👉 Next time someone pitches you a deal, don’t fall in love with the profit headline. Ask:

What’s the cash flow?
When does money go out?
When does it come back?

Because in real estate, cash flow beats profit—every time.

👉 For more straight talk on real estate and finance—based on real deals, not theory—hit subscribe to Getting Real with Peleg.

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