Some Simple Terms You Need To Know In Mandalagan Bacolod Real Estate Investing

Investing in real estate is difficult, most especially if you are not accustomed to the terms being used on a daily basis. Getting familiar with these terminologies is a good start so you’ll be able to catch up to your co-investors and to prevent yourself from getting fooled or misunderstood. Don’t worry if you’re still struggling for now. For starters, it is just normal that you mix up one term with the other but eventually you’ll be able to enhance your understanding on these terms. For now, it is important to take one step at a time. To get started, here are some of the simple terms that you need to know in Mandalagan Bacolod real estate investing.

1. CAP Rate

CAP rate or capitalization rate is the potential return of the investment. It is the ratio of the gross yearly income divided by the cost of the property in Mandalagan Bacolod. The rate is parallel to the size of return which means that the higher the rate, the larger the return. This formula is one of the things you’ll encounter in real estate that’s why it is important to be familiar with it.

2. NOI

NOI or Net Operating Income is used in real estate rentals. Net Operating Income is the amount that you generated from a property in Mandalagan Bacolod that you own. By “owned property”, it means that you are already free of any mortgage or bank loans.

3. Debt Service

This is the amount that you have to pay with a specific period of time to cover the repayment of a debt’s interest and principal. This is usually calculated on an annual basis.

4. GSI

This stands for Gross Scheduled Income. This is the annual rental income generated from a property if one hundred percent of the property’s space is rented and given that all rental fees are collected.

5. GOI

Gross Operating Income is the rental income that the real estate investor collects to continually provide amenities to the property for rent.

6. Operating Expenses

This refers to the cost that is spent in order to operate the property. This includes the insurance, maintenance, utilities and property taxes. However, payments for capital, income taxes and mortgages are not included in this type of expense.