DEFINITIONS

ePIL

Abbreviation to mean Estero Property Investments Limited (ePIL) and/or Estero LLC

LLC
Limited Liability Company.

SPE
Special Purpose Entity. Some lending institutions require a SPE (such as an LLC) be formed to own the properties that they will lend against

Net Income
Calculated as total annual rents received from the property(s) less estimated annualised deductions (as applicable) for property taxes/rates, property insurance, property management fees, mortgage principal & interest and total annual direct expenses. Net Income excludes any deductions for income tax, bridging finance and indirect business expenses (eg, travel, legal, accounting, etc).

see sample calculations here

ROI – return on investment % There are three ROIs you need to know about. The first is the properties net income (sometimes called the CAP rate) BEFORE borrowing or any form of leverage The second ROI is Cash ROI AFTER borrowing, being your cash on cash return after expenses and debt service etc The third ROI is the internal rate of return IRR being your cash income + principal payments divided by investment capital Go here to see all three clearly illustrated Investment Sum/Amount/Capital The actual cash or deposit paid to purchase the property. Typically, for the purposes of calculating ROI, this sum will exclude loan fees, legal fees including closing costs and title insurance, appraisals, loan applications costs, broker fees and all soft costs related to the property purchase and the like LTV An abbreviation commonly used by banks and lenders to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property. For instance, if a someone borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000 to $150,000 or $130,000/$150,000, or 87%. Title Insurance (Clear Title Guarantee) Closing attorneys and title companies arrange title Insurance to guarantee the purchaser clear title to their property and whilst it is not compulsory, it is nevertheless peace of mind for a purchase that is usually 6 figures or more. Appraisal on an ‘Investment Basis’ Meaning the appraisal is calculated by capitalizing the properties Net Income. Valuation on a ‘Sales Evidence Basis’ Meaning the appraisal is calculated using comparable sales for other properties in the area. A Door A term used to describe how many individual units are located at one address. For example a duplex would be two doors as it collects two rents and has two separate families as occupants. Disclaimers Nothing on this website constitutes legal, tax, or financial advice. Prospective Investors should seek their own professional advice on the consequences of investing. No representation is made that any further information will be given, other than is required by law. Furthermore, the information contained on this website is not comprehensive and is selective. This document does not contain all the information that a prospective Investor may require to evaluate a decision to invest and the risks associated with that investment. In making a decision to invest, prospective Investors must rely on their own examination of the information contained on this website, as well as all other information as they may consider relevant.