Is Paying Debt An Operating Expense

In The Complete Guide to Investing in Rental Properties (New York McGraw-Hill, 2004), I described the use of debt in the following excerpt. Table 5.2 Effect of Leverage on Invested Capital Applying Annual Appreciation Only Other people's money can be provided to you in one of two forms either debt or equity. The most common type of financing is debt. Debt is most often provided in the form of some type of loan which can come from any number of sources including banks, mortgage companies, family...

Blended Financing And The Weighted Average Cost Of Capital

When purchasing income-producing properties, especially larger ones, investors often combine several sources of financing, including both debt and equity. For example, an investor may purchase a 450-unit apartment building using a first mortgage for 70 percent of the total purchase price plus improvements, then raising another 15 percent of the total purchase price plus improvements through equity arrangements, then borrowing an additional 10 percent of the total for capital improvements from...

Advanced Real Estate Investment Analysis

In the previous chapter, we examined 10 different real estate investment performance measurements, which enabled us to better understand how an income-producing property was performing at a given point in time. These measurements are considered to be static measurements, meaning that they do not take into account a property's performance over more than one time period. Instead, performance is measured at either a specific point in time or over one period of time, for example, one month or one...