What is an equity reversion?
The definition of Equity Reversion Value is: A lump-sum benefit that an investor receives or expects to receive at the termination of an investment based on the Reversion Value less transaction costs and mortgage debt. At 621 pages, this is the most comprehensive real estate investing product on the market.
Why are taxes due on sale not equal to the before tax equity reversion times the appropriate tax rate?
Why are taxes due on sale not equal to the before-tax equity reversion times the appropriate tax rate? benefit by pushing profits into the future, reducing their tax burden now and allowing them to invest money rather than pay it to the government. The before-tax going-in IRR on a shopping center acquisition is 13%.
What is Pbtcf real estate?
Property before tax cash flow. ▪ PBTCF= NOI – Capital expenditures. ▪ Expected inflows minus expected outflows.
What is before tax cash flow in real estate?
The amount of money an investment produces after the collection of all revenue items and payment of operating expenses and debt service. It may be positive, but once deductions are applied, the after-tax value may be negative. However, the property still generated positive cash flow.
How do you calculate equity reversion?
The before-tax equity reversion, defined as net selling price minus the remaining mortgage balance, at the time of sale less taxes due on sale.
How do you calculate reversion value in real estate?
It depends on for whom and for what purpose you are evaluating the property, but usually a 10-year holding period is assumed. The discounted cash flow adds the sum of the present value of the first 10 years NOI and then uses the eleventh year NOI to determine the reversion value.
Which one of the following is equal to before-tax equity reversion?
The before-tax equity reversion, defined as net selling price minus the remaining mortgage balance, at the time of sale less taxes due on sale. Annual net operating income less annual debt service.
What are the two components of taxes due on sale?
The personal income tax is the state’s main revenue source, the property tax is the major local tax, and the state and local governments both receive revenue from the sales and use tax.
How can your after-tax cash flow be higher than your before-tax cash flow in a real estate investment?
How can your after-tax cash flow be higher than your before-tax cash flow in a real estate investment? plus interest expenses exceed the net operating income: DE þ IE > NOI. of the interest tax shields from the debt to the borrower.
What does Pbtcf stand for?
PBTCF stands for “Property Before-Tax Cash Flow” How to abbreviate “Property Before-Tax Cash Flow”? “Property Before-Tax Cash Flow” can be abbreviated as PBTCF.
How do you calculate equity before tax cash flow?
Here’s How:
- Begin with the Net Operating Income of the property.
- Subtract the money out for debt service.
- Subtract any capital expenditures.
- Add any loan proceeds.
- Add any interest earned.
- You have now come to the result, which is the Cash Flow Before Taxes (CFBT) for this property.
- Begin with Net Operating Income.
What is a good equity dividend rate?
An equity dividend rate of 10% is considered a low return in real estate investing. Remember that the higher the equity dividend rate percentage–the higher the actual cash return will be. Generally, equity dividend rates of 35% to 55% are considered to be ideal for any investor.
