TUTORIAL: ARTICLES

learning center

The following articles have been written to help you understand the nuances of real estate investing. Please feel free to share this page with your friends and associates.

Formulations

  • Break-Even Ratio (BER)
    The ratio often used by lenders when trying to decide whether or not to underwrite an investment property loan...
  • Capitalization Rate
    The popular return used by analysts to measure an asset's financial performance and make similar-type property value comparisons...
  • Cash Flow
    A fundamental look at real estate investment property cash flow for those of you new to real estate investing...
  • Cash-on-Cash Return (CoC)
    Cash-on-Cash, the popular real estate investing return, is explained including its meaning, shortcoming, and formulation...
  • Debt Coverage Ratio (DCR)
    Debt coverage ratio (DCR) is explained for those engaged in real estate investing who might not understand its purpose and formulation...
  • Gross Rent Multiplier (GRM)
    A quick and easy way to determine whether or not a property is priced in line with other similar-type properties...
  • Internal Rate of Return (IRR)
    The time value computation that shows the ratio between future cash flows and initial cash investment as a percentage...
  • IRR, MIRR, FMRR
    The formulations for internal rate of return, modified internal rate of return, and financial management rate of return are explained...
  • Loan-to-Value (LTV) Ratio
    A computation related to mortgages that lenders use when financing investment property as a measurement of their financial risk...
  • Maximum Purchase Price
    A calculation investors can make to determine the maximum price they can pay for an income property to at least break-even and avoid a negative cash flow...
  • Net Present Value (NPV)
    Net present value is explained along with its formulation and use in real estate investing...
  • Payback Ratio
    The benefit of calculating the payback ratio during a real estate analysis is explained with formula...
  • Profitability Index
    The time value computation that shows the 'proportion' of dollars returned to dollars invested rather than the amount...
  • Sinking Fund Factor
    Know the amount you you must start setting aside on a regular basis now to cover a capital expenditure scheduled in the future...

Tax Matters

  • Annual Depreciation Allowance
    How to figure the annual depreciation allowance the IRS permits real estate investors to write off as a tax deduction for their residential and commercial investment real estate properties...
  • Recapture Tax
    A look at the depreciation recapture tax real estate investors might owe the IRS when they sell their income property...

Analysis

  • Financial Leverage
    Financial leverage explained and how it can impact a real estate investor's returns and profitability...
  • Scenario Analysis
    The scenario analysis is explained so you know how to use it to benefit your next investment real estate evaluation...
  • Sensitivity Analysis
    Changing one variable at a time over a possible range of outcomes in order to evaluate the effect of that change...

Reports

  • The APOD
    Discover why the APOD is used by real estate investors to examine the annual property operating data of potential real estate investment properties... or watch the video.
  • The Proforma Income Statement
    How a proforma income statement is created to project rental property revenues and expenses that real estate investors use to forecast and evaluate its financial performance over time...

General

Software Specific