The Break-Even Ratio (BER)
Friday, January 02
Break-even ratio (or BER, and sometimes called default ratio) is a ratio often used by lenders when they are considering to underwrite a loan for investment real estate properties.In effect, BER tells the lender how vulnerable a property might be to defaulting on its debt in the event t...
What IRR, MIRR and FMRR Each Provide to Real Estate Investors
Thursday, January 01
IRR, MIRR, and FMMR are acronyms for rates of return associated with real estate investing. Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Financial Management Rate of Return (FMRR) are each mathematical formulations designed to measure the profitability of a real es...
Understanding Rental Property Depreciation and Recapture Tax
Wednesday, December 31
Depreciation and recapture tax are the two sides of a "proverbial" coin associated with the IRS income tax allowance that directly affects investors who own real estate income property.Whereas the tax code permits investors an annual tax deduction allowance for the depreciation of real estate in...
4 Contingencies Your Offer to Purchase Rental Property Should Include
Wednesday, November 05
In this article I would like to suggest four contingency – or "Subject to" – clauses that brokers, realtors and real estate investors should include into every offer they write when it comes to purchasing rental income property.For any offer to purchase real estate is a legal contract that ...
Top 21 Real Estate Investing Terms...with Formulas!
Monday, July 28
During my thirty-year tenure as a realtor and investment real estate specialist, I encountered far too many colleagues and real estate investors that had little-to-no understanding about the real estate investing terms, rates of return and formulas such as these I'm providing i...
How to Compute 'Mid-month' Convention for Depreciation Allowance
Saturday, April 05
One of the biggest tax deduction benefits associated with real estate investing is depreciation (also known as cost recovery). In the acquisition or sale year of the property, however, the IRS applies what is called the 'mid-month' convention which affects the amount of depreciation allowance...