jacksparrow

I think for real estate investment the initial outlay considers only the equity investment is b/c the debt portion is paid off when you are computing the final after-tax cf (the after-tax equity reversion) since the equity reversion includes your selling price - selling cost - amortized mortgage balance - tax.

Also,when you are calculating the ATCF you are subtracting the annual debt service. This and the mortgage payback in the equity reversion will be already included in your calculation of the NPV and therefore you don't include it in your initial outlay. If you were to do so, you'd be double counting it.