True Net Equity™

Traditionally, equity (for real estate investors) is defined as the property value – mortgage balances. Equity = Property Value – Mortgage Balances However, in almost all cases, equity defined that way means that only a portion of that equity “belongs” to the real estate investor. To access that equity the real estate investor must either sell the property or cash-out refinance the property. In both cases, some or… possibly all of the traditional equity… is consumed by sale or refinance costs. In the case of a refinance, there are costs to the lender and title company to access the equity. … Read more

Return Quadrants™

If you think about the 4 areas of return you get from owning a rental property they are: Appreciation – The tendency for property values to increase over time. Cash Flow – The net proceeds you get from collecting rent on a property after all expenses. Debt Paydown – The amount of the loan that is paid down each year (presumably—albeit indirectly—by your tenants) when you make your mortgage payments. Depreciation – The tax benefits you receive by statute from owning rental properties. As I was teaching real estate investing classes, I would methodically go through each of these 4 … Read more