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Property Analysis Metrics

Learn what the different property analysis metrics mean and how they're calculated.

By Cindy1 author64 articles

Purchase PriceThe amount you're paying to purchase a property.

Market ValueThe current market value of a property.

After Repair Value (ARV)The estimated market value of a property after its rehab is complete.

Purchase CostsCosts and fees associated with purchasing a property, also called closing costs.

Rehab CostsExpenses you expect to pay to improve a property's condition or perform repairs.

Total Cash NeededThe total amount of cash you will need to purchase and rehab a property.

Total Cash InvestedThe total amount of capital you have invested in a property.

70% RuleStates that the purchase price of a property should be less than or equal to 70% of its ARV, minus the rehab costs.

1% Rule (Rental Properties)States that the ratio of monthly gross rent to the purchase price should be 1% or higher.

2% Rule (Rental Properties)States that the ratio of monthly gross rent to the purchase price should be 2% or higher.

50% Rule (Rental Properties)States that operating expenses should be less than or equal to 50% of the operating income.

Loan TypeAmortizing loans are paid down over time, while interest-only loans are due in full at the end of their term.

Loan TermThe length of time after which a loan will be paid in full, or will have its remaining balance due.

Amortization PeriodThe length of time it will take to pay off an amortizing loan in full, based on its interest rate and payment schedule.

Compound IntervalThe interval at which interest is compounded when calculating amortizing loan payments.

Mortgage Insurance (PMI)An additional upfront or recurring payment required by some lenders.

Remaining EquityThe equity remaining in a property after a refinance, inverse of the new loan's LTV.

Amount FinancedThe portion of a property's purchase price (and optionally the rehab costs) financed by the lender.

Loan PaymentsThe principal and interest (or interest-only) payments required to repay your loan, excluding any escrow payments.

Balloon PaymentsThe final payment on a balloon or an interest-only loan, equal to the remaining balance at the end of the loan term.

Loan InterestThe portion of the loan payment that goes toward paying the interest on the loan.

Refinance CostsCosts and fees associated with refinancing a property, also called closing costs.

DealCheck ARV EstimateAn automated ARV estimate provided by DealCheck, based on the property type, location and market conditions.

Calculated ARV EstimateEstimated ARV based on the average sale price of comps and a property's living area.

RentCast Rent EstimateAn automated rent estimate provided by RentCast, based on the property type, location and market conditions.

Calculated Rent EstimateEstimated gross rent based on the average listed rent of comps and a property's living area.

Gross RentThe total rent collected from your tenants.

Vacancy ExpenseThe amount you will lose in a given time period due to vacancy.

Other IncomeAny miscellaneous income you expect to receive from a rental property, excluding rent.

Operating IncomeTotal income generated by a property, less the vacancy expense.

Operating ExpensesAll expenses you will pay while renting out a property, excluding loan payments.

Holding CostsAll recurring expenses you will pay while rehabbing a property during a flip.

Net Operating Income (NOI)Net income generated by a property, not accounting for loan payments.

Cash FlowThe total net amount you will receive from a rental property as income.

Post-Tax Cash FlowThe total net rental cash flow after subtracting the estimated income tax.

Total EquityThe actual portion of a property's market value that you own.

Selling CostsCosts and fees associated with selling a property, also called closing costs.

Total Profit (Rental Properties)The total cumulative profit you will receive if you were to sell a rental property.

Total Profit (Flips)The total net amount you will receive as profit from a flip.

Post-Tax Profit (Flips)The total net profit from a flip after subtracting the estimated income tax.

Total Profit (Wholesale)The total net amount you will receive as profit from a wholesale.

Post-Tax Profit (Wholesale)The total net profit from a wholesale after subtracting the estimated income tax.

Capitalization Rate (Cap Rate)A rate of return that compares the yearly NOI to the purchase price or market value.

Cash on Cash Return (COC)A rate of return that compares the yearly cash flow to the total invested cash.

Return on Equity (ROE)A rate of return that compares the yearly cash flow to your total equity in a property.

Return on Investment (ROI)The total return on your invested cash if you were to sell a property.

Internal Rate of Return (IRR)An average annualized rate of return on your invested capital.

Rent to Value Ratio (RTV, RTP)A ratio that compares the monthly gross rent to the purchase price or market value.

Gross Rent Multiplier (GRM)A ratio that shows the number of years it will take for the yearly rent to add up to the purchase price.

Equity MultipleA ratio that shows the total return on your invested cash if you were to sell a property.

Break Even Ratio (BER)The minimum occupancy needed to cover all operating expenses and loan payments.

Loan to Cost Ratio (LTC)A ratio between the loan amount and the acquisition costs of a property.

Loan to Value Ratio (LTV)A ratio between the loan amount and the market value of a property.

Debt Coverage Ratio (DCR, DSCR)A ratio that compares the yearly NOI to the yearly loan payments, often used for loan qualification.

Debt YieldA ratio that compares the yearly NOI to the total loan amount, often used for loan qualification.

Vacancy RateA percentage of time you expect a property to remain vacant during a given time period.

AppreciationAn anticipated annual increase of a property's market value.

Income IncreaseAn anticipated annual increase of the gross rent and any miscellaneous income.

Expense IncreaseAn anticipated annual increase of the operating expenses.

Holding PeriodThe amount of time it will take to rehab a property.

Rehab Cost OverrunAn anticipated increase of the rehab budget beyond the originally planned amount.