Real estate investors frequently use three metrics to measure the performance of an income-producing property: capitalization (cap) rate, return on investment (ROI) and cash-on-cash returns. It’s recommended to use all three to get the best understanding of a property’s potential rate of return. The ROI formula is annual return divided by total investment. When to…
All Real Estate Financing Articles - Page 3
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Free Net Operating Income (NOI) Calculator
How to Read Your NOI Calculator Results The rules of thumb for net operating income are typically: NOI should be positive on an income-producing property. NOI is typically calculated on a yearly basis. NOI does not include your monthly mortgage payments. NOI is typically used to figure out cap rate, ROI, and cash flow to…
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Top 20 Benefits of Investing in Real Estate from the Pros
When done correctly, real estate is one of the most popular and profitable investments with a lot of potential for success. Real estate investing offers many advantages, and investors can enjoy a steady income flow that may lead to financial freedom. We spoke with the industry experts who shared the various benefits of investing in…
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Adjustable Rate Mortgage: ARM Rates, Types & More
An adjustable rate mortgage (ARM), or variable rate mortgage, is a home loan that has a periodically changing interest rate. Typically, the initial rate on an adjustable rate mortgage is lower than on fixed rate mortgages, averaging 4.38 percent. That rate can climb during the loan term, making ARM loans more unpredictable and riskier over…
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Free Cap Rate Calculator for Real Estate Investors
A cap rate is a rate that helps real estate investors evaluate an investment property. Our free cap rate calculator generates a property’s net operating income and cap rate based on inputs including property value, gross income and operating expenses. Investors can then decide whether the property is a good value. Capitalization Rate Calculator Rule…
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Net Operating Income for Real Estate Investors: How to Calculate NOI Formula
Net operating income (NOI) is a calculation of the income generated by a real estate investment. It measures the amount of cash flow generated by an investment property after operating expenses but before principal and interest payments, capital expenditures, depreciation, and amortization. Investors use NOI to determine the value and profitability of an income-producing property….
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Carrying Costs on Real Estate Investments – 2018
Real estate carrying costs are the costs an owner must pay on an investment property during the time he or she owns it. The most common carrying costs are paid monthly and include utilities, mortgage payments, taxes, property insurance and more. These carrying costs apply to both fix-and-flip investors and buy-and-hold investors. What Are Carrying…
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Balloon Mortgages: Rates, Payment & More
A balloon mortgage is a loan in which a large portion of the principal is repaid in one payment at the end of the term. Investors use a balloon mortgage to qualify for a higher loan amount, lower rates, and lower monthly payments. Balloon mortgage rates typically start around 4.5 percent with five- to seven-year…
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Capitalization Rate Formula & What a Good Cap Rate Is
A capitalization rate, or cap rate, is used by real estate investors to evaluate an investment property and show its potential rate of return, helping decide if they should purchase the property. The cap rate formula is cap rate = net operating income/current property value. A good cap rate is typically higher than 4 percent….
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Financing REO Properties: 2 Types of REO Loans
An REO is a piece of real estate that is owned by a lender after that property was unsuccessfully offered at a foreclosure auction. Financing real estate owned (REO) properties typically is done with two types of REO loans: hard money loans and conventional mortgages. REO loan rates are 4.5% to 12% with terms of…
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Jumbo Loan: Rates, Limits, & Requirements
A jumbo loan is a mortgage that has a maximum loan amount above the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In 2018, the jumbo mortgage limit for single family homes is any mortgage above $453,100 in most counties, but it can reach as high as $679,650 in others. If you’re…
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Interest Only Mortgages: Rates, Qualifications & Providers
An interest only mortgage features monthly payments that only cover the interest and don’t include repayment of the principal loan amount. The principal is refinanced or repaid by the end of the term. Many real estate investors like interest only mortgages because they have very low monthly payments despite having mortgages rates between 6 –…
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