- Sales Comparison Approach
- Gross Rent Multiplier Approach
- Direct Capitalization Approach
- Cash on Cash Approach
- Demographic/Trends Approach
The following approaches take into account the Time Value of Money (TVM), so you can compare real estate investment with other investment types
- IRR (Internal Rate of Return)
- Net Present Value (NPV)
- Capital Accumulation
Please call me to learn about or further understand how to make use of these approaches as you make investment decisions.
Commonly Used Investor Terms:
Net Operating Income (NOI) = Income – Expenses. The income projected from a property after deducting losses from vacancy, collection and operating expenses.
Capitalization Rate = NOI/Purchase Price
Cash Return on Investment = NOI/Down Payment
Triple Net Lease or Net Net Net Lease (Commercial): A lease requiring the tenant to pay all operating and other expenses. Including costs incurred in maintaining the property, and fees for insurances, utilities and repairs.
Gross Lease (Commercial): The tenant pays a fixed rent and the landlord pays taxes, insurance, repairs and utilities and operating expenses and the like related to the property.
Percentage Lease (Commercial): Rent is based on a fixed price plus a percentage of gross income received by the tenant doing business.
Common Tax Deductions for Owner Occupied and Investment Property:
City Real Estate Taxes
Loan Origination Fees
Loan Discount Points
Loan Prepayment penalties
The NOI loss on a rental property up to 25K. (At certain income levels, writing off this loss must be deferred until you sell)
Depreciation on Residential Property – 27.5 years; Commercial – 39 years