BBQ Capital is constantly adding readers. How do I know this? By the internal stat counter. So one of the issues I like to revisit over and over and over and over again is the 4 Benefits of Real Estate Investing.
Cash Flow Before Taxes. Simple enough. You take all of your income, subtract all of your expenses and what is left over is your cash flow before taxes. For your Cash-On-Cash return you simply divide that number by the total amount of dollars you have put into the income property.
Principal Reduction. Again, fairly simple. Take the total amount you put towards debt service and subtract that portion that was interest. What’s left over is the amount your tenant’s put on your rental house’s mortgage towards your retirement.
Depreciation. This is a bit more complicated. Especially if you accelerate your deprecation. But in short, it’s an amount the government allow you to write down your investment property each year…so long as the depreciation schedule is in effect. Do not overlook this benefit. It’s major.
Appreciation. What’s the property worth now. Subtract what you paid for it. That’s your appreciation.