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Investing - The basic terms

When it comes to investing it is important to be have knowledge and understanding of the terms you will be commonly presented with. Some of these terms are even used to gauge the value of an investment property.

Income: The sum of all rents, leases and other forms of earnings received Expense: The cost required for something, property taxes, insurance, utilities, maintenance etc. NOI (Net Operating Income): The Net Operating Income is used to analyze real estate investments. It is the revenue generated when the expenses are subtracted from the income.

Cash Flow: Cash Flow is the net amount of cash or cash-equivalents flowing into and out of an investment property.

ROI (Return on Investment): The Return on Investment analyzes the efficiency of a real estate investment relative to the investment's cost. This is calculated by dividing the Cash Flow by the Down Payment on the Mortgage.

CAP Rate (Capitalization Rate): The capitalization rate is the rate of return on a real estate investment based on the income the property is expected to generate. This rate, displayed as a percentage, is used to estimate the investor's potential return on their investment.


Have any questions? Bruno Gobeil, Broker of Record/Owner

Royal LePage North Heritage Realty, Brokerage 705.688.0007

Cassandra Beach, Executive Assistant

Royal LePage North Heritage Realty, Brokerage 705.688.0007

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