Index
Please note that index links point to page beginnings from the print edition. Locations are approximate in e-readers, and you may need to page down one or more times after clicking a link to get to the indexed material.
adjusted basis, 70–71, 294–296, 301–303
ADS. See annual debt service (ADS)
amortization. See loan amortization; loan amortization schedule
annual cap rates, 79
Annual Compound Interest Factors table, 149–150
annual debt service (ADS)
cash flow, 203–207
debt coverage ratio, 76–77, 250–253
defined, xxiv
annual percentage yield (APY), 152
Annual Present Value Factors table, 157–159, 219–223, 313–317
annual property operating data. See APOD (annual property operating data)
annualizing information, 158
annuity, ordinary, 45
annuity factor, 277
annuity functions, 46–49
anticipated future income stream, 81–84
apartment building investment case study, 108–120, 139–140
APOD (annual property operating data)
analysis of similar properties, 13–16
case studies, 59, 109–120, 130–134
common mistakes, 110–114
net operating income, 176–177
obtaining form, 19–20
overview of, 10–13
triple-net lease, 135–142
working with, 20–26
Appraisal Institute, 7
appraised value
loan-to-value ratio, 261–266
performance over time, 115, 120
property taxation, 290–293
appreciation. See also property value
description of, xxii–xxiii
example of, 29–30
forecasting potential for, 64–72
time value of money and, 29–30
APY (annual percentage yield), 152
assessed value, 197, 291–293, 299
assessment ratio, property tax, 291, 293
assets
adjusted basis, 294–296
cap rate for capital improvements, 132
leases as, 40
PV of future cash flow, 156–159
triple-net lease properties as, 142
attorneys, 5–6
balloon payment
calculating, 277–281
mortgage payment and, 271
overview of, 268
understanding, 276
band of investment, derived cap rate, 79–80
base-year expense stop, 125
before-tax proceeds. See sale proceeds
benchmarks
break-even ratio, 254–256
debt coverage ratio, 250–253, 254
loan-to-value ratio, 254, 261–266
price/income/expenses per unit, 240
bingo year, 74
break-even ratio (BER), 254–256
building measurements
gross building area, 243–245, 305, 309–312
loss ratio, 309–311
net rentable area, 243–245, 309–310
rentable square footage, 244–245, 309–310
usable square footage, 243, 245, 309–311
buying properties. See also resale
analysis before, 9–26
decision-making process, xviii–xix, 3–5
emotional factors and, xviii
gain on sale, 70–72, 294–296, 301–303
return on. See return on investment
sale proceeds. See sale proceeds
calculations
adjusted basis, 294–296
appraised value, 290–293
assessed value, 290–293
break-even ratio, 254–256
building measurements, 308–312
capitalization rate, 180–185
cash flow, 202–207
cash-on-cash return, 208–212
compound interest, 148–153
debt coverage ratio, 250–253
depreciation, 296–300
discounted cash flow, 218–223
effective gross income, 170–173
gain on sale, 301–303
gross operating income, 170–173
gross rent multiplier, 160–162
gross scheduled income, 163–165
internal rate of return, 234–238
land measurements, 304–307
loan-to-value ratio, 261–266
maximum loan amount, 286–289
mortgage constant, 271–275
mortgage payment, 271–275
net income multiplier, 186–189
net operating income, 174–179
net present value, 224–230
operating expense ratio, 246–249
points, 267–270
potential gross income, 163–165
present value, 35–40
present value of future cash flow, 156–159
price/income/expenses per square foot, 242–245
price/income/expenses per unit, 239–241
principal balance/balloon payment, 276–281
principal/interest per period, 282–285
proficiency in real estate, xvii
profitability index, 231–233
property taxes, 290–293
return on equity, 257–260
rule of 72s, 154–155
sale proceeds, 213–217
simple interest, 145–147
taxable income, 190–201
using Excel to make, 30–34
vacancy/credit loss, 166–169
calculator, real estate, 278
cap rates. See also interest rates
accurate data for, 182
annual, 79
calculating, 180–185
choosing, 177
defined, 77
derived, 79–80
finding local, 8
forecasting property value, 66–67
gross operating income and, 182–185
higher vs. lower, 67
investor’s, 80
lender’s, 79
meaning of, 132
net income multiplier and, 186–189
net operating income and, 53–54, 65–68, 177
overview of, 77–79
property taxes and, 293
property value and, 53–54
triple-net leases and, 135, 137, 139, 141
capital accumulation (CpA), 98–105
capital additions
adjusted basis and, 294–296
cash-on-cash return and, 209
defined, 203
forecasting NOI, 116–117, 128, 131, 133
net present value and, 228
repairs vs., 57
taxable income depreciation, 191–195, 199–201
capitalization rates. See cap rates
case studies
apartment building, 108–120
mixed-use property, 121–134
overview of, 107
small strip shopping center, 59–64
triple-net lease, 134–142
cash flow. See also assets; positive cash flow
calculating, 202–207
capital accumulation vs., 100–105
cash-on-cash return and, 208–212
discounted. See discounted cash flow (DCF)
internal rate of return and, 85–96, 234–238
investment return as, xix–xxi
measuring real estate investment quality, 75
mortgage payments using, xxiii
negative cash flow, xx–xxi, 94–96, 98, 132
net present value and, 225–230
positive vs. negative, xx
projecting future, 116–120
property value and, 63–64
PV of, 35–40
PV of future, 156–159
taxable income and, 54–55, 57–58
value of lease and, 41–44
cash flow after taxes (CFAT)
calculating cash flow, 203–205
CFBT vs., 202
overview of, 58–59
property value and, 63–64
return on equity and, 257–260
cash flow before taxes (CFBT)
calculating, 203–207
as cash flow, 202
cash-on-cash return and, 209, 211
mixed-use property and, 129
overview of, 57–58
property value and, 63–64
triple-net leases and, 137–139, 141
cash-on-cash return, 74–75, 208–212
CFAT. See cash flow after taxes (CFAT)
CFBT. See cash flow before taxes (CFBT)
closing costs
adjusted basis and, 70
associated with purchase, 112–113, 138
writing off over time, 191–192
commercial loans, 268
commercial properties
depreciation calculation, 297–300
expenses paid by tenants, 123–124
gathering data on, 7
lease evaluation, 40–44, 196–197
price/income/expenses per square foot, 242–245
price/income/expenses per unit, 239–241
triple-net leases for single-tenant, 134–136
common area maintenance, 124, 134
compound interest
rule of 72s, 154–155
understanding, 27–30
conversion factors, land measurement, 305
cost recovery, 55, 297–300. See also depreciation
CpA (capital accumulation), 98–105
credit
allowance. See vacancy and credit allowance
personal, 286
risk, 286
data
annualizing, 158–159
importance of, 3
market-related, 6–7
property-related, 4–6
DCF. See discounted cash flow (DCF)
debt coverage ratio (DCR)
anticipating over period of years, 77
calculating, 251–253
calculating maximum loan amount, 286–289
case studies, 109, 118, 129, 133
rule of thumb, 252
triple-net leases and, 135, 137, 139, 141
debt service
case study, 63
cash flow before taxes and, 57
cash-on-cash return and, 209–212
deductions
depreciation. See depreciation
investment properties as tax shelters, xxiv–xxvi
tax on sale of income property, 71–72
default ratio, calculation of, 254–256
deferred maintenance, 18
depreciation
adjusted basis and, 294–296
gain on sale, 302
investment properties as tax shelter, xxiv–xxvi
property value and, 59–62
rule of thumb, 299
taxable income deduction, 55, 70–71, 191–196, 199–200
understanding, 297–298
depreciation recapture, 55
derived cap rates, 79–80
discount rate
discounted cash flow, 82–84
internal rate of return, 86–89, 234–238
lease evaluation, 41–43
net present value, 224–225
profitability index, 231–232
PV of future cash flow, 156–158
discounted cash flow (DCF)
calculating, 218–223
capital accumulation and, 100–105
internal rate of return and, 85–93
net present value and, 225–230
overview of, 218
PV of future cash flow, 157–159
rate of return and, 80–84, 97–98
discounting, 36–44
downloadable forms/templates in this book, xv–xvi
effective gross income. See gross operating income (GOI)
electricity costs
analyzing expenses, 12–17, 114–116, 122, 128
spot-checking utility bills, 5
using APOD, 20–25, 110–111, 176
emotional factors, buying properties, xviii
equity
derived cap rate and, 79–80
dividend rate. See cash-on-cash return
loan-to-value ratio and, 261–262
return on, 257–260
Excel application
compound interest, 150
internal rate of return, 87–93, 235–238
modified internal rate of return, 98
mortgage calculation, 46–49
mortgage payment, 272
principal balance/balloon payment, 277–281
PV of future cash flow, 158–159
real estate calculations, 30–34
value of lease, 41–44
expense pass-through, 42–44, 124–127, 135–136
expense ratios, 16–19
expense recoveries (expense reimbursements), 124–127, 135–136
expenses. See operating expenses
feet, land measurement, 305
finance rate (safe rate), 96, 98
financial management rate of return (FMRR), 96, 98–99
fixed periodic payment, 271
forecasting
appreciation potential, 64–72
cash flow after taxes, 258–259
cash flows, 63, 90, 92, 159, 204
discounted cash flow, 220, 222
internal rate of return, 234
rates of increase for expenses, 122
sale proceeds, 213–217
using multiyear APOD, 115–120
forms
APOD. See APOD (annual property operating data)
downloadable in this book, xv–xvi
front feet, land measurement, 305
fuel oil costs, 5, 12–15, 19–25
future cash flow, 156–159
future income stream, 81–85, 130–133
future value (FV)
compound interest, 28, 149–151
PV of future cash flow, 157–159
real estate calculations, 29, 32–34
sale proceeds, 216–217
gain on sale, 70–72, 294–296, 301–303
GRM (gross rent multiplier), 75–76, 160–162
gross building area (GBA), 243–245, 305, 309–312
gross income
operating. See gross operating income (GOI)
scheduled. See gross scheduled income
gross operating income (GOI)
analyzing, 11–16
on APOD form, 20–25
break-even ratio, 255–256
calculating, 170–173
cap rate, 182–185
defined, 10
gross scheduled income vs., 164
net operating income and, 52–53, 175–179
operating expense ratios and, 17, 246–249
property manager percentage of, 113
triple-net leases and, 136–138, 141
vacancy/credit loss and, 166–169
gross rent multiplier (GRM), 75–76, 160–162
gross rental income, 75
gross scheduled income
on APOD form, 20–25
calculating, 163–165
case studies, 59–60, 109–111, 123, 127, 129
defined, 10
gross operating income, 170–173
gross rent multiplier, 75–76, 161–162
net operating income and, 77, 176–177
price/income/expenses per square foot, 243–245
price/income/expenses per unit calculation, 239–241
triple-net leases and, 136–138, 141
vacancy/credit allowance and, 167–169
gross scheduled rent income
APOD form, 20–25, 111, 113, 115
cap rates and, 78
cash flow and, 205
gross operating income and, 176
operating expense ratio and, 248
taxable income and, 195, 198, 201
guess rate, 98
half-month convention
cash flow after taxes, 62
depreciation determination, 298–300
meaning of, 55–56
taxable income and, 192, 194, 200
hectares, land measurement, 304–307
improvements to property, in forecasting, 117
income. See also income stream
analyzing similar properties, 13–16
APOD form, 19–26
basic definitions of, 10–13
comparing expense ratios, 16–19
gross operating. See gross operating income (GOI)
net income multiplier, 186–189
net operating income. See net operating income (NOI)
overview of, 9–10
potential gross. See gross scheduled income
rental. See rental income
statement of. See APOD (annual property operating data)
taxable. See taxable income
income stream
appreciation as. See appreciation
buying properties for, xviii, 53
cash flow as, xix–xxi
DCF. See discounted cash flow (DCF)
of lease, 41
loan amortization as. See loan amortization
market value as function of property, 53
net operating income measuring, 53–54, 66
net present value and, 40
potential, 187
present value and, 35–40, 81–85, 185
repairs/improvements and, 75
tax shelter as, xxiv–xxvi
income tax
analyzing before buying, 22, 24
calculating taxable income, 190–200
cash flow after, 58–59, 63–64, 202–204
cash flow before. See cash flow before taxes (CFBT)
computing liability, 72
depreciation, 297–300
liability for sale of income property, 70–72
market value of property vs., 53
not an operating expense, 52
property value and, 59
information. See data
insurance costs, 12, 14–17, 20–25, 125–127
interest income
adding to property’s taxable income, 192
compound interest. See compound interest
simple interest, 145–147
taxable income and, 56
interest rate per period, 272–275, 282–285
interest rate/points mix, 267
interest rates
compound. See compound interest
no-money-down real estate investing, 263
periodic. See periodic interest rate
principal/interest per period, 282–285
property value and, 53–54
safe rate, 96
simple, 145–147
trading points for lower, 269
interest-only payments, 59, 191, 274
internal rate of return (IRR)
calculating, 235–238
modified, 97–98
problems with, 94–96
rule of thumb, 92
investment returns, types of
appreciation, xxii–xxiii
cash flow, xix–xxi
loan amortization, xxiii–xxiv
overview of, xix
tax shelter, xxiv–xxvi
investors, decision to buy, xviii
investor’s cap rate, 80
IRR. See internal rate of return (IRR)
land measurements, 304–307
last payment, mortgage, 276, 284
leases
commercial, 123–127
in offer to purchase, 5
triple-net, 134–142
lenders
debt coverage ratio and, 77, 250, 252
no money down and, 212
resale estimate and, 217
lender’s cap rate, 79
loan amortization
calculating, 56
closing costs, 70, 112–113, 138, 191–192
defined, xxiv
investment return as, xxiii–xxiv
mortgage payment/mortgage constant and, 271–275
structured as ordinary annuity, 45
loan amortization schedule, 61, 216, 278–284
loan balance, 48, 258, 272, 276, 279
loan points
amortization of, 57
calculating, 267–270
property value and, 61
tax on sale of income property, 71–72
as taxable income deduction, 192–197, 200
trading for lower rate, 269
loans
cash flow and, 203–207
FHA and VA, 261
paying. See mortgage payments
loan-to-value ratio (LTV), 261–266
loss, taxable income or, 55–56
loss ratio, 309–311
LTV (loan-to-value ratio), 261–266
maintenance. See repairs/maintenance
marginal tax bracket, 54
market cap rate
defined, 79
dissecting with derived cap rate, 79–80
external circumstances and, 54
net income multiplier, 189
market value
appraised value at, 290–291
assessed value and, 292
calculating income stream, 53–54
gross operating income, 172
gross rent multiplier, 75, 160–162
market-related data, 6–8
Mastering Investment Real Estate (Realtors National Marketing Institute, 1982), 95
maximum loan amount, 286–289
meters, land measurement, 305
mixed-use property investment case study, 121–134, 139–140
modified internal rate of return (MIRR), 96–99, 236–237
Monthly Mortgage Payment per $1—Mortgage Constant table, 45–46, 272–281, 313, 318–321
mortgage constants
calculating, 272–275
lender’s cap rates, 79
maximum loan amount, 286–289
Monthly Mortgage Payment per $1 and, 45–46, 272–281, 313, 318–321
mortgage financing
closing costs, 70, 112–113, 138
commercial loans, 268
described, 45
FHA/VA loans, 261
loan balance, 48, 258, 272, 276, 279
loan-to-value ratio, 261–266
maximum loan amount, 286–289
monthly payments, 45–49, 206–207, 272–274
mortgage constants. See mortgage constants
points. See loan points
mortgage interest. See interest rates
mortgage loans. See mortgage financing; mortgage payments
mortgage payments
calculating, 272–275
cash flow before taxes and, 63
debt coverage ratio and, 76
derived cap rate, 79–80
fixed periodic, 271
loan amortization. See loan amortization
Monthly Mortgage Payment per $1, 45–46, 272–281, 313, 318–321
months/years remaining, 277
payment period/amount, 45–49
principal balance, 277–279
mortgage payoff amounts, 214–215, 217, 223
mortgagee, defined, 271
mortgagor, defined, 271
N (number of payment periods), 46–49, 272–275
negative cash flow, xx–xxi, 94–96, 98, 132
net income, defined, 51
net income multiplier (NIM), 186–189
net operating income (NOI). See also income stream
analysis for similar properties, 14–16
analysis of, 11–12
APOD form for, 20–25
calculating, 174–179
case studies, 110–113, 128–129
cash flow and, 203–207
cash flow before taxes and, 57–58
cash-on-cash return and, 209–211
debt coverage ratio and, 76–77, 250–253
defined, 10
forecasting into future, 116–120
importance of, 174
maximum loan amount and, 286–289
meaning of, 51–54
property value and, 53–56, 59–64
reconstructing after due diligence, 114
resale price, 65–66
selling price, 66–67
taxable income and, xxiv–xxvi, 55–56, 190
triple-net lease, 137–139, 141
net present value (NPV). See also present value (PV)
@NPV function, Excel, 39
calculating, 225–230
profitability index, 231–233
net rentable area (NRA), 243–245, 309–310
net revenue, xxii
NIM (net income multiplier), 186–189
NOI. See net operating income (NOI)
nonresidential income property, depreciation, 55, 62
norms, analyzing similar properties, 13–16
NPV. See net present value (NPV)
NRA (net rentable area), 243–245, 309–310
number of compounding periods (NPER), 28, 30–34, 149–153
number of payment periods (N), 46–49, 272–275
Offer to Purchase, 5
online resources
Annual Compound Interest Factors table, 149–150
Annual Property Operating Data form, 19
comparable sales data, 7
Excel internal rate of return calculations, 87–93
Excel model for evaluating leases, 41
Excel mortgage calculations, 273
Excel templates accompanying this book, 32
loan amortization schedule, 61, 278
Monthly Mortgage Payment per $1, 45–46
software to analyze property value, 61
operating expense ratio, 246–249
operating expenses
analyzing, 11–16
APOD form for, 20–25
cap rate, 182–185
case studies, 109–115, 122–124, 127–129
commercial property data for, 7
defined, 10
expense ratios, 16
leases, 42
net operating income and, 52–53, 77, 174–179
operating expense ratio, 246–249
price/income/expenses per square foot, 243–245
price/income/expenses per unit, 239–241
property taxes and. See property taxes
property value and, 60
triple-net leases and, 136–141
operating income, 10, 13–16, 174–179
optimum holding period, 92
ordinary annuity, 45
original basis, adjusted basis, 294–296
passive loss allowance, 71
payback period, 73–75
payments. See mortgage payments
per unit expenses, 239–241
periodic interest rate
compound interest, 28–30, 149–153
mortgage calculations, 30–34, 45–49
mortgage constants, 273
PV of future cash flow, 157–159
personal credit, 286
physical structures (improvements), depreciation, 297–300
points. See loan points
positive cash flow
calculating PV, 35
capital accumulation comparison, 100–105
financial management rate of return, 97
importance to investors, 64
measuring payback period, 73–74
modified internal rate of return, 98
overview of, xx–xxi
problems with IRR, 94–96
projecting, 117–118
reinvestment rate for, 96
potential gross income. See gross scheduled income
present value (PV). See also net present value (NPV)
Annual Present Value Factors table, 157–159, 219–223, 313–317
cap rate, 180–185
cash flow, 35–40
compound interest, 28
discounted cash flow, 81–84, 219–223
future cash flow, 156–159
internal rate of return, 85
lease evaluation, 40–44
mortgage financing, 46–49
net income multiplier, 187–189
real estate applications, 29–30
real estate calculations in Excel, 31–34
present worth, 80–84. See also present value (PV)
price/income/expenses per square foot, 242–245
price/income/expenses per unit, 239–241
principal amount (PV), mortgage calculations, 45
principal balance
balloon payment, 276–279
calculating, 277–281
compound interest, 149–153
simple interest, 145–147
understanding, 276
principal/interest per period, 282–285
profitability index, 231–233
projections
accuracy of, 159
full-year, 214
raw data for, 3
realistic, 25
property manager, 113, 122, 140
property tax bill, 4
property taxes
analyzing similar properties, 14–15
APOD form for, 20–25
assessments, 192
calculating, 290–293
examination of, 192
expense pass-through, 42
expense ratio comparison, 16
expense stop, 125–126
increases in, 15
lease evaluation, 42–43
net operating income and, 178
taxable income and, 192, 195, 197–198, 201
tenant contribution to, 124–125, 134–136
property value
apartment building investment, 110–114
case study, 59–64
cash flow after taxes, 58–59
cash flow and taxable income, 54–55
cash flow before taxes, 57–58
mixed-use property investment, 128–129
net operating income and, 77
overview of, 51–54
potential resale price and, 64–72
present. See present value (PV)
taxable income or loss, 55–56
property-related data, gathering, 4–6
purchase contracts, 6
purchase price
adjusted basis, 294–296
analyzing potential deal, 128–129
appreciation and, xxii, 28, 70–71
depreciation and, 298–300
gain on sale and, 301–302
loan-to-value ratio, 261–262, 264–266
measuring return, 87
NOI as return on. See net operating income (NOI)
taxable income and, 191–193, 196
total, 132
PV. See present value (PV)
rate of return, 8, 37, 39, 53–54, 65–68. See also return on investment
real estate applications, 29–30
real estate calculations. See calculations
RealData Real Estate Calculator, 278
reassessment (revaluation), 20, 290–291
reinvestment rate, 96
rentable square footage (RSF), 244–245, 309–310
rental commissions, 24
rental income. See also gross scheduled rent income
break-even ratio, 254
estimating value with gross rent multiplier, 160–162
estimating with gross rent multiplier, 75–76
gross building area, 243–245, 305, 309–312
loss ratio, 309–311
lost. See vacancy and credit allowance
net rentable area, 243–245, 309–310
potential, 166
rentable square footage, 244–245, 309–310
usable square footage, 243, 245, 309–311
rental rates, 4
repairs/maintenance
analyzing operating expenses, 12
analyzing similar properties, 14–15
APOD form, 20–25
capital improvements vs., 57
common area maintenance, 124
evaluating, 113
expense ratios, 16–18
paid by tenant, 134
return on investment while deferring, 75
resale. See also buying properties; selling price
discounted cash flow, 81–84, 220
forecasting appreciation potential, 64–72, 217
internal rate of return, 86
internal rate of return and, 90–93
return on equity, 257–258, 260
timing of, 77
resale price, xxii–xxiii, 28, 66, 90
residential income property, 55, 62
residential tenants, 108–120, 121–134
retail tenants, 121–134
return on equity (ROE), 257–260
return on investment
appreciation, xxii–xxiii
cap rates, 77–79
capital accumulation comparison, 98–105
cash flow, xix–xxi
cash-on-cash return, 74–75
debt coverage ratio, 76–77
derived capitalization rate, 79–80
discounted cash flow, 80–84
financial management rate of return, 94, 97
future cash flow, 35–40, 83–88, 157–159
future income stream, 81–85, 130–133
gross rent multiplier, 75–76
internal rate of return, 85–93
loan amortization, xxiii–xxiv
modified internal rate of return, 94, 97–98
payback period, 73–75
present value. See present value (PV)
problems with IRR, 94–96
rule of thumb, 106
tax shelters, xxiv–xxvi
revaluation (reassessment), 20, 290–291
reversion, 84
risk rate, 96
risk-adjusted safe rate, 80
road frontage, 305
ROE (return on equity), 257–260
RSF (rentable square footage), 244–245, 309–310
rule of 72s, 154–155
Rules of Thumb, xvi
safe rate (or finance rate), 96, 98
sale proceeds
calculating, 213–217
forecasting appreciation potential, 66, 69, 72
internal rate of return, 236–237
before tax, 137, 139, 141, 223
understanding, 213
saving, downloaded Excel files for this book, xv
scheduled rent, 5, 164–165, 172–173. See also gross scheduled rent income
seller, viewing tax return of, 5
selling price
adjusted basis, 294–296
analyzing potential, 65–69
apartment building and, 118–119
discounted cash flow, 223
estimating future, 66–67
estimating value with gross rent multiplier, 161–162
gain on sale and, 301–303
loan-to-value ratio, 261–266
mixed-use properties and, 129–134
triple-net leases and, 137, 139, 141
sentimental attachment, buying/selling, xviii
sewer costs. See water and sewer costs
shopping center, 197–201. See also commercial properties
simple interest calculation, 145–147, 148–153
square footage
comparing sales data, 6–7
land measurement, 304–307
price/income/expenses per, 242–245
usable, 309–311
square meters, land measurement, 305
square miles, land measurement, 305
target-date mutual funds, 142
tax bill, 4
tax rate, 291–293
tax shelters and, xxiv–xxvi
taxable income
cash flow after taxes, 58–59
cash flow and, 54–55
cash flow before taxes, 57–58
definition of, 190
or loss, 55–56
taxes
adjusted basis and, 294–296
apartment building investment case study, 111–112
APOD form for, 20–25
cash flow after. See cash flow after taxes (CFAT)
cash flow before. See cash flow before taxes (CFBT)
gain on sale and, 301–303
income. See income tax
marginal tax bracket, 59
property. See property taxes
before-tax sale proceeds. See sale proceeds
templates, companion to book, xv–xvi
time, simple interest calculation, 145–147
time value of money
cash flow and, 35–40
compound interest and, 27–28
discounted cash flow and, 81–82
evaluating leases, 40–44
measuring return using payback period and, 74
mortgage calculations, 30–34, 44–49
real estate applications, 29–30
trash removal costs, 15, 17, 19
triple-net lease investment, 134–142
unit, price/income/expenses per, 239–241
usable square footage (USF), 243, 245, 309–311
useful life
amortizing mortgage closing costs over, 192
of capital additions, 192, 203
depreciation allowance, 191–192, 199–200, 297–300
utility bills, 5
vacancy and credit allowance
APOD form for, 20–25, 111–112, 127, 129
calculating, 166–169
defined, 10
gross operating income, 170–173
gross scheduled income, 163–165
net operating income, 77, 174–179
property value, 60
triple-net leases, 136–138, 141
value. See property value
water and sewer costs, 12–16, 20–25
Web resources. See online resources