Question 1

What does ADR mean in short-term rentals?

Accepted Answer

Average Daily Rate: A metric representing the average rental income per paid occupied room in a given period.

Question 2

What does REVPAR mean in short-term rentals?

Accepted Answer

Revenue Per Available Room; calculated by multiplying the Average Daily Rate (ADR) by the occupancy rate.

Question 3

What does BONUS DEPRECIATION mean in short-term rentals?

Accepted Answer

A tax incentive that allows a business to immediately deduct a large percentage of the purchase price of eligible assets in the first year of use.

Question 4

What does 1031 EXCHANGE mean in short-term rentals?

Accepted Answer

A tax-deferred transaction allowing an investor to sell a property and reinvest the proceeds into a 'like-kind' property to defer capital gains taxes.

Question 5

What does COST SEGREGATION mean in short-term rentals?

Accepted Answer

A tax strategy that identifies personal property assets within a building and reclassifies them to shorten depreciation time from decades to 5-15 years.

Question 6

What does COST SEGREGATION STUDY mean in short-term rentals?

Accepted Answer

An engineering-based report that identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, reducing current income tax obligations.

Question 7

What does CAP RATE mean in short-term rentals?

Accepted Answer

The capitalization rate used in commercial real estate to indicate the rate of return expected to be generated on an investment property based on its net income.

Question 8

What does CASH ON CASH RETURN mean in short-term rentals?

Accepted Answer

The annual pre-tax cash flow of an investment divided by the total amount of initial cash invested (down payment, closing costs, furnishing, renovations).

Question 9

What does CASH-ON-CASH RETURN mean in short-term rentals?

Accepted Answer

The annual pre-tax cash flow divided by the total cash invested in the property, expressed as a percentage.

Question 10

What does UNDERWRITING mean in short-term rentals?

Accepted Answer

The process of evaluating a property's financial potential and risks to determine if it is a sound investment.

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