Profit vs. Cash Flow: Why It Matters for Real Estate Distributions

Profit doesn’t mean you can take money out.

One of the most common mistakes real estate owners make is assuming distributions are available simply because the income statement shows a profit.

But profit and cash flow are not the same thing.

A profit and loss statement shows rent income and expenses. It does not show:

• How mortgage payments affect cash
• Whether reserve accounts are properly funded
• Upcoming repairs or capital expenditures
• The impact of vacancies or timing issues

That’s why a property can appear profitable on paper while still experiencing cash flow strain.

The better monthly question isn’t:

“How much profit did we make?”

It’s:

“Can this property distribute cash this month and remain financially stable?”

Distributions should be planned, not assumed.

Profit matters — but cash flow determines whether distributions are sustainable.

If you’re unsure whether your property can support distributions, need help interpreting your cash flow, or want clarity before taking money out, I’m happy to help.