When it comes to buy-and-hold real estate, some expenses are obvious: mortgage payments, routine maintenance, occasionally replacing fixtures or appliances, and paying your property manager. Other expenses may be forgotten until after you’ve blown your budget. Here are some common expenses of buy-and-hold rental properties to keep in mind so that they don’t sneak up on you! City/HOA Fines If you...
As a real estate investor, you’ll have to take out mortgages. The hardest part of this (besides paying them off!) is deciding which mortgage option to go with. Is a 15-year mortgage best so that you can pay it off more quickly and save on interest? Or should you go for a longer mortgage period and pay less each...
Here are some of the questions we’ve recently been asked about rental property taxation. When do I have to pay taxes on my rental income? You need to report your rental property income in the same year that you earn the income. Are expenses deductible even when the property is vacant? As long as the property is listed as being available for rent,...
Lenders classify properties in different ways depending on how the property will be used. Financing a primary residence is different than financing an investment property. Here are the differences between the two main types of properties. We’ll also explain why the rules are different for each one. Financing a Primary Residence What Constitutes a Primary Residence? A primary residence is, of course,...
The Federal Reserve raised its overnight rate again a little over a month ago, and as a result, there are a lot of people who were expecting that mortgage rates would go up as well.  However, this assumption has gone wrong as mortgage rates have since declined in the period after. Current mortgage rates have slid to around 4.04%...
Understanding the concept of Return on Investment (ROI) is essential for every investor. It is a term that is used to indicate how much money you will get back from an investment after accounting for all of the expenses. It is expressed as a percentage of the original investment cost, and is one of the simpler metrics used when...
Worried about your finances? When it comes to money, does it seem like one day you have it, and the next day it’s gone? To overcome this issue, you need to manage your finances better, and here is a one week plan to help do that. Spending around 30 minutes every day for one week will help you to...
Net Operating Income (NOI) is the calculation of (Gross Income - Operating Expenses). Operating expenses include such items as repairs, property taxes, management fees, maintenance, etc.  Operating expenses do not include debt service (principle and interest) or depreciation. As such, NOI does not reflect the actual net income the property will provide, nor the taxable income. https://www.reinvestorforum.com

Cap Rate

The Cap Rate, or Capitalization Rate, is a common measurement tool used by real estate professionals to measure the attractiveness of a property. Cap Rate measures the Net Operating Income (NOI) as a percent of the Sales Price.  It excludes the expense for debt service (mortgage interest), and provides a straighforward view on the return on investment (ROI) that can...