Depreciation in Real Estate Depreciation is a measurement of the decline in asset value over time until the value of the asset becomes zero, or the property is sold, whichever comes first. Depreciation can happen to virtually any fixed asset, including...
GSI vs GOI vs NOI Gross Scheduled Income: Total scheduled income, not considering vacancies Gross Operating Income: Total income from rent Not considering expenses Net Operating Income: Usually shorted as NOI. Total net income after we remove vacancies and all expenses,...
Net Operating Income A business could have sales for 10 million dollars a year and be in poor shape financially. We need to know the revenue and cost of running the business to figure out a net profit before taxes. Example...
IRR (Internal Rate of Return) What is ‘Internal Rate Of Return : From Investopedia: Internal Rate of Return (IRR) is a metric used in capital budgeting to measure the profitability of potential investments. Internal Rate of Return is a discount rate...
Usually, yield is only based on rental income, whereas a total rate return includes capital gains. If you are trying to make a decision to buy or not a property both measurements are important Yield is similar to CAP RATE cap...
Taxes and deductions for the real estate owner: It's a good idea to consider the tax consequences of buying or investing in real estate. Here's a primer on real estate taxes to get you started....
Investors do what is traditionally called BOE ( Back of the Envelope analysis). The GOAL of BOE is to quickly dismiss projects that do not make sense for our investment strategy. An example of a quick decision is: Property A price...
Commercial Real Estate Investing Advantages: Most commercial properties are rented with a NNN triple net lease and the tenant is responsible for all expenses. Commercial has also the great advantage that requires much less maintenance from the owner, most commercial retail...
Hard Money Loans: When you hear the words “hard money loans” (or “private money loans”), what’s the main thing that experiences your brain? If you think about “loan sharks” who deal with vague terms , those are mostly illegal. Some bad...
