Real Estate Investment &
Tax Calculators

A DSCR ratio of 1.20 to 1.25 is typically considered the standard minimum by commercial and DSCR lenders. This means the investment property generates 20% to 25% more net operating income (NOI) than its annual debt service. Some specialized lenders may qualify properties down to a 1.00 DSCR or even lower if the borrower has strong credit and cash reserves.

Cap rate is calculated by dividing the property's annual Net Operating Income (NOI) by its current market value or purchase price. For example, a property generating $50,000 in NOI purchased for $1,000,000 has a 5% cap rate. It is the most common metric used to evaluate the unlevered rate of return of a commercial real estate investment.

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's a real estate investment strategy where you purchase a distressed property, renovate it to force appreciation, rent it out to generate cash flow, and then do a cash-out refinance to pull your initial capital back out, allowing you to repeat the process on a new property.

To qualify for the full Section 179 vehicle write-off, the vehicle must have a Gross Vehicle Weight Rating (GVWR) of over 6,000 pounds (typically heavy SUVs, trucks, and cargo vans like the Ford F-150 or Tesla Model X). Additionally, the vehicle must be put into active business service and used more than 50% for business purposes during the tax year.

As a standard LLC (disregarded entity), all net profit is subject to the 15.3% self-employment tax. By electing S-Corp status, you can split your business profit into two streams: a W-2 reasonable salary (which pays self-employment taxes) and owner distributions (which are exempt from self-employment taxes, saving you a flat 15.3% on that distributed portion).

Yes, hard money loans are frequently used to purchase and renovate distressed rental properties (the "Buy" and "Rehab" phases of the BRRRR method). However, because hard money loans have high interest rates and short terms (usually 6-12 months), you must eventually refinance the hard money loan into a long-term conventional or DSCR loan once the property is stabilized and rented.

PITIA is an acronym that stands for Principal, Interest, Taxes, Insurance, and Association dues. It represents the total monthly housing expense for a property. Lenders calculate PITIA to determine a borrower's debt-to-income ratio or a property's Debt Service Coverage Ratio (DSCR).

No, land itself cannot be depreciated under Section 179 or standard MACRS depreciation because land is considered to have an indefinite useful life. When depreciating commercial real estate, you must subtract the assessed value of the land from the total purchase price to determine the depreciable building basis.