rental property analysis: Why Investors and Lenders Need the Break-Even Ratio
- 07/30/12 11:13 AM
Why should you be concerned about the break-even ratio of an income producing property? If you know that the cash flow coming in meets or exceeds the cash flow going out, what else should you know? Ratios, percentages and math, are they really necessary? Which answer would you give; yes and no? If your answer was no, then I can make some assumptions about your investing strategies. Debt was not attached to the property when purchased, you paid all cash. Vacancy rates are not a concern; all your tenants are long-time tenants who pay in full and on time. Your operating … (0 comments)
rental property analysis: Importance of Operating Expenses and Operating Expense Ratios
- 07/29/12 06:41 AM
Any type of expense is something you pay for. If you paid for it, then is it an operating expense? Just because you paid for something is not necessarily an operating expense. An operating expense is an item that will ensure that the property will continue to produce income. Examples of these expenses are; property taxes, utilities, supplies, property management fees, the cost of repairs and maintenance, snow & trash removal, advertising, accounting or legal fees, lawn care and insurance. Expenses in the operation of an income property are not; mortgage or loan payments, tax depreciation, capital additions or improvements and … (0 comments)
Why should you be concerned about the break-even ratio of an income producing property? If you know that the cash flow coming in meets or exceeds the cash flow going out, what else should you know? Ratios, percentages and math, are they really necessary? Which answer would you give; yes and no?
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