1031 Exchange: A 1031 Exchange is a process in which once you sell an investment property, you may roll the gains into your next rental property- a process in which you can defer the capital gains until the sale of the new property
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Depreciation: This is a tax strategy in which the IRS allows you to legally acknowledge that the real structure of your property is slowly depreciating, thus allowing you to take a tax "loss" to offset rental income. *Contact your accountant for additional tax advice
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Cash on Cash Return: This is a term that investors commonly use in order to analyze and find the profitability of a particular investment property. For example, if you put $100,000 down on a $500,000 investment home, and that yields you $10,000 a year in cash flow, you are making 10%CoC return!
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Cap Rate: A term used to determine the profitability of an investment. For example, if you purchase a property for $100,000 and your income is $10,000 after expenses of $90,000, the Cap Rate is 10%. This is typically used to define an investment in terms of an all-cash purchase of a property.
