Negative Cash Flow

PVX cannot accommodate negative cash flows, because market observations are not available to quantify the effect of negatives when all cash flows are combined. If you have tried this, you will have received a warning notice and further action will have been blocked, since negative cash flows cannot be accommodated. Relatively small amounts can usually be ignored. If there are large negative cash flows that must be paid (property taxes, security and maintenance for properties that do not and will not produce revenue, for example), it can be appropriate to separately calculate the present value of the negative annual cash flows over the restriction period using either a borrowing rate or real estate yield rate (selected to match the cause of the negative cash flows) and then subtract the subject interest’s share of that present value from the value that PVX concludes for the interest. This step requires a market yield rate determination, and for that reason should be done by, or in consultation with, a professional valuer.