In a mortgage payment, the principal is the portion that goes toward reducing the loan balance, while the interest is the cost paid to the lender for borrowing the money. At the beginning of the loan, a larger share of each payment covers interest because the loan balance is high, but over time, as the balance decreases, more of the payment goes toward the principal. This gradual shift in payment allocation is typical in a standard amortized mortgage.

Homeowners Associations (HOAs) are organizations in residential communities—typically condos, townhomes, or gated neighborhoods—that manage and maintain common areas, set community rules, and ensure certain property standards. HOAs collect monthly or annual fees from residents to fund services like landscaping, security, amenities (e.g., pools or gyms), and sometimes even exterior maintenance for shared buildings. In Canada, HOAs aren’t as widespread as in the U.S., but they do exist, especially in condo developments and some newer suburban communities. Condo associations are common across Canada, while traditional HOAs are more likely to appear in areas with specific amenities, like gated or planned communities, particularly in cities like Toronto, Vancouver, and Calgary.

Cash flow in real estate refers to the net income left each month after collecting rent and covering all property-related expenses, like mortgage payments, property taxes, insurance, maintenance, and any management fees. Positive cash flow means your rental income exceeds expenses, providing profit, while negative cash flow means expenses outweigh income, requiring you to cover the shortfall. Investors generally aim for positive cash flow to ensure a steady income stream and financial cushion for unexpected costs.