Principal Payment Quandry....

[Noah Weitzman]

Hello! Thanks for reading this and for the help. 

For all you short term rental owners out there, when you are calculating your return (cash on cash) are you including principal as an expense, income, or deferred until the sale of the property? 

The community seems pretty split on this from what I have read. Since you do not realize principal until a sale its hard to quantify as monthly income, however, since you will get that money back at a sale its not really an expense. 

How do you quantify this conundrum in monthly return calculations? Thanks! Noah

[Jason D.]

@Noah Weitzman I see it as an expense. It comes out of my bank account. For an overall return calculation, it would be a positive because it becomes equity, but for monthly cash flow analysis, expense