New landlords are often mystified when their "income property" produces no actual income. The usual suspects — taxes, insurance, maintenance, management, repairs — get all the blame. But there's a cost hiding in plain sight that most investors never stop to calculate: the cost of the money itself.

If you borrowed to buy the property, your lender is a silent partner in every deal you do. And silent partners expect to get paid.

The Loan Constant — also called the Mortgage Constant or Debt Service Constant — is a single percentage that tells you exactly what your borrowed money costs you on an annual basis. The math is straightforward: divide your annual debt service (total principal and interest payments for the year) by your loan amount.

That's it. One number. Tells you everything.

Take a $100,000 loan in three common scenarios:

30-year fixed at 7% Your monthly P&I is $665.30, or $7,983.60 per year. Loan constant: 7.98%.

15-year fixed at 6% (the bank gave you a break on rate — or so they'd like you to think) Monthly P&I jumps to $898.83, or $10,785.96 per year. Loan constant: 10.78%.

5-year interest-only at 7% (balloon at the end) Monthly payment is $583.33, or $7,000 per year. Loan constant: 7.00% — identical to the interest rate, which is always the case on interest-only loans.

Say you bought a $120,000 house — $20,000 down, $100,000 financed — and it rents for $1,200 a month. After TIMMR (Taxes, Insurance, Management, Maintenance, and Repairs) takes its customary 25%, you're left with $10,800 in net income before debt service.

Run those three scenarios:

Same house. Same rent. Same TIMMR. Three completely different outcomes — determined entirely by loan structure.

It depends. Your motivation, financial position, and level of sophistication all factor in. The interest-only note produces the most cash flow, but you're not building equity and you have a balloon payment coming. The 15-year mortgage is quietly bleeding you every month, even though you're building equity fast. The 30-year sits in the middle, doing both jobs reasonably well.

There's a school of thought that says the only truly cash-flowing properties are those owned free and clear. There's truth to that. But there's also a Return on Equity argument that cuts the other direction — and that may be worth its own tip someday.

For now, just know the number. Before you close, before you commit, before you sign anything — run the loan constant. It won't tell you everything, but it will immediately tell you whether this deal has a chance of paying for itself.