Have you hopped out of the S&P – Time to buy real estate?

At times folks decide it is time to try real estate. Perhaps you have inherited a home from your parents or see an investment property nearby. This useful article summarize 4 key metrics..

  1. cap rate; Property cap rate = Net Operating Income/Current Market Value – article provides an example
  2. Cash flow; cash flow = NOI – capital expenses & debt services – some can be gleaned from the seller but this will be specific to your financing and expenses you anticipate given the property features and condition.
  3. Cash-on-cash return (COC) – Great explanation of what you pay to buy and rehab if needed. This is the metric that helps you compare to other investments – like stocks.
  4. Vacancy loss – planning for vacancy is needed; finding ideal renters who want longer leases are like diamonds to be treasured.

4 property metrics investors know and rely upon

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