Rental Income
Real estateGlossary term
Definition
Money received from tenants for the use of real estate property. Rental income is considered taxable but can be offset by deductions including mortgage interest, property taxes, insurance, maintenance, and depreciation.
Related terms
- Cap RateCapitalization rate measures a rental property's potential return, calculated by dividing net operating income by the property's market value. A property generating $12,000 annually valued at $200,000 has a 6% cap rate. Used to compare investment properties.
- Cash-on-Cash ReturnA measure of annual pre-tax cash flow relative to the total cash invested in a property. Unlike cap rate, it accounts for financing. If you invest $50,000 and receive $5,000 in annual cash flow, the cash-on-cash return is 10%.
- Property ManagementThe operation, oversight, and maintenance of real estate by a third party on behalf of the owner. Property managers handle tenant screening, rent collection, maintenance, and legal compliance, typically charging 8-12% of monthly rental income.
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