LEARNING CENTRE

The terms behind the numbers.

A quick reference for investment property financing.

Property qualifying income divided by debt service under the lender’s calculation.

Principal, interest, property taxes, insurance and association dues.

Net operating income: effective property income minus operating expenses, before financing costs.

Loan-to-value compares one loan with value. Combined loan-to-value includes additional secured debt.

Loan-to-cost compares financing with eligible acquisition and project costs.

After-repair value: the estimated property value once planned work is complete.

A lender’s required period of ownership, loan history or stabilized performance before a transaction.

Eligible liquid funds a lender requires to remain available after closing.

A contractual charge that can apply when a loan is paid off early.

Buy, rehab, rent, refinance, repeat: a strategy that depends on financing, value and cash flow at each stage.