Why do you need to understand what CADS is?

Whether you are an active investor like me or passive investor like those who back my deals, you should understand this basic concept in real estate.

If you’re just learning how to become a real estate investor, you definitely need to know what CADS means to your ability to grow your business and control more properties.

Briefly, CADS has to do with your total income and expenses. I’ll explain further in a minute.

For more on CADS right now, watch this quick video:

 

Now let’s take a deeper look…

When calculating CADS, you first have to look at your overall revenue, which comes in the form of rents and any additional services you offer.  – In my real estate investment world, that could be the coins that come in from your on-site paid laundry facility or other paid extra that you find in multifamily properties and apartment buildings.  – Tweet  

Next you look at all expenses required to run your company. This includes employees and other paid team members, taxes, professionals you have to pay, marketing costs, travel, and maintenance and repairs, etc.

On the side of expenses, you also have to consider any type of debt (finance expenses) required to operate your business. Whether you are paying a private lender or a bank, it’s likely you are paying a certain amount of money every month toward owning the property. That is an important cost and it is calculated into your monthly expenses.

That monthly expense is also called “debt service.” (The mortgage payment is your debt service.)

Now you subtract your expenses from your income. That gives you the CADS. You may hear this called net operating income or NOI. Either way, the money that is left over (the cash after your expenses and debt service) each month is yours to keep.

It shows how efficiently you operate your business.

The more CADS you see, the more cashflow you are earning each month.

The more money you bring home the better, right?

Steady cashflow gives you more power to reinvest it into your properties for improvements so you can charge higher rents. It gives you the power to invest in other properties.  – The more efficiently you run your business the more CADS or NOI you will see.  – Tweet  

Now that you understand what CADS is a little better, I’ll leave you with this question:

What is the next investment that you will look at to help you determine what your CADS might be? (And will you take action?)

Share your answer in my private Facebook group or reach out to me through my website.

As usual, if you have questions about the process of buying rental properties, I’m here for you. Lately you can find me online everywhere! I’ve been having a great time creating abundant new content for you. To schedule a time to chat use this link:

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