A very simplistic answer is its a 2000 furnace Payment$1950 is principle on the furnace$50 is InterestDate                      Account Title                      Debit            Credit12/2/2014             Cash                                                       $ 200012/2/2014            Liability Furnace Loan         $195012/2/2014            Expense- Interest                 $  50                                                                                              $2000           $2000Also the Furnace expenditure should increase the cost basis of the property for valuations and cost accounting and profit/loss metrics

@Kyle TolbertYou essentially did seller financing.As a result - the $5,500 that you get every month will be paid towards basis, capital gains and interest income.In simplistic terms - $5,500 x 12(months in a year) x 30(per the agreement) = $1,980,000.You will be reporting $1,230,000 of interest income over 30 years.More of the interest income will be reported in the earlier years since not much of the payment will go towards the principal.The bad thing is that interest income is normally taxed at ordinary rates.

I will be the negative nancy and point out that prequalifications are rather simplistic calculations and are not what the underwriter actually does who is the person who really decides yes or no on your actual loan.

I'm not sure if it was worth writing all this, but it's slow this morning :)All of this is part of what we bean counters call debt management, debt is not as simplistic in business as it is in personal finance with good or bad debt.

The lesson here is that simplistic formulas can be very misleading.

Expenses Example:  For simplistic purposes let's say the house cost $100K. 

In it's most simplistic form, a COC ROI of 20% means that you will recoupe 20% of your upfront investment costs each year so it will take you ~5 years to recoup 100% of your investment (100%/20% = 5).The way to think about what would be an acceptable COC ROI in real estate: the stock market, on average, generates a return of 5-7% annually so if you're going to invest the amount of time in resources it takes to be a real estate investor, you want to make it worth your while and generate a better return than the stock market.

This is kind of a simplistic answer, but are you getting $615 a month in interest on your savings?

JonObviously, Supply and Demand is an extremely simplistic way to look at something as complicated as the US Housing Market.

It's not that hard, but it should be made to be simplistic either.