Michael,
Very nice and clean explanation about valuing investment properties.
Question; If one wanted to evaluate several properties looking for a 20% ROI, would you include MTG payments as an expense? Tax treatment of MTG interest is different, as apposed to say… the trash expense. The tax man doesn’t allow me to deduct trash bills.
More…. More
Thanks,
Skip
One suggestion, Change the ABOUT (page) in your site menu on the home page to COMMENTS (page), and open that link in a new window. I think this will help make it easier for your readers find this page and respond to your comments
Hi Skip,
The respond to your questions, we first need to break down your questions into each component. The NOI or Net Operating Income is a pre-tax number that does include your trash or scavenger fees as well as all of your operating expenses for the building. Subtract your mortgage interest from your NOI and you get your taxable income. The mortage interest isn’t an operating expense.
Something in your message made me think you are looking at several residential properties – I may be mistaken. Since I specialize in commercial properties, I can say that trash expenses are fully applied to your operating expenses. I don’t know why that would be different for residential investment properties, but I suppose it could be. Your CPA would be the best person to answer that.
As for your comment on my About page, I did make the change based on your feedback. I truly appreciate your feedback.
Michael,
Very nice and clean explanation about valuing investment properties.
Question; If one wanted to evaluate several properties looking for a 20% ROI, would you include MTG payments as an expense? Tax treatment of MTG interest is different, as apposed to say… the trash expense. The tax man doesn’t allow me to deduct trash bills.
More…. More
Thanks,
Skip
One suggestion, Change the ABOUT (page) in your site menu on the home page to COMMENTS (page), and open that link in a new window. I think this will help make it easier for your readers find this page and respond to your comments
Hi Skip,
The respond to your questions, we first need to break down your questions into each component. The NOI or Net Operating Income is a pre-tax number that does include your trash or scavenger fees as well as all of your operating expenses for the building. Subtract your mortgage interest from your NOI and you get your taxable income. The mortage interest isn’t an operating expense.
Something in your message made me think you are looking at several residential properties – I may be mistaken. Since I specialize in commercial properties, I can say that trash expenses are fully applied to your operating expenses. I don’t know why that would be different for residential investment properties, but I suppose it could be. Your CPA would be the best person to answer that.
As for your comment on my About page, I did make the change based on your feedback. I truly appreciate your feedback.
Yours in profitable investing,
Michael