Property Analysis Metrics | Help Center

Property Purchase

Total Cash Needed

The total amount of cash you will need to purchase and rehab a property.

Written by Cindy Bellford
Updated over a week ago

Total Cash Invested

The total amount of capital you have invested in a property.

Written by Cindy Bellford
Updated over a week ago

Purchase Criteria

1% Rule (Rental Properties)

States that the ratio of monthly gross rent to the purchase price should be 1% or higher.

Written by Cindy Bellford
Updated over a week ago

2% Rule (Rental Properties)

States that the ratio of monthly gross rent to the purchase price should be 2% or higher.

Written by Cindy Bellford
Updated over a week ago

50% Rule (Rental Properties)

States that operating expenses should be less than or equal to 50% of the operating income.

Written by Cindy Bellford
Updated over a week ago

65% Rule (Flips)

States that the purchase price of a flip should be less than or equal to 65% of its ARV, minus the rehab costs.

Written by Cindy Bellford
Updated over a week ago

70% Rule (Flips)

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

Written by Cindy Bellford
Updated over a week ago

Financing

Loan Payments

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

Written by Cindy Bellford
Updated over a week ago

Loan Interest

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

Written by Cindy Bellford
Updated over a week ago

Valuation

Calculated ARV Estimate

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

Written by Cindy Bellford
Updated over a week ago

Calculated Rent Estimate

Estimated gross rent based on the average listed rent of comps and the property's living area.

Written by Cindy Bellford
Updated over a week ago

Cash Flow (Rental & BRRRR Properties)

Vacancy Expense

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

Written by Cindy Bellford
Updated over a week ago

Operating Income

Total income generated by a property, less the vacancy expense.

Written by Cindy Bellford
Updated over a week ago

Operating Expenses

All expenses incurred while renting out a property, excluding loan payments.

Written by Cindy Bellford
Updated over a week ago

Net Operating Income (NOI)

Net income generated by a property, not accounting for loan payments.

Written by Cindy Bellford
Updated over a week ago

Cash Flow

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

Written by Cindy Bellford
Updated over a week ago

Post-Tax Cash Flow

The total net rental cash flow after subtracting the estimated income tax.

Written by Cindy Bellford
Updated over a week ago

Property Sale (Flip & Wholesale Properties)

Total Profit (Flips)

The total net amount you will receive as profit from a flip.

Written by Cindy Bellford
Updated over a week ago

Post-Tax Profit (Flips)

The total net profit from a flip after subtracting the estimated income tax.

Written by Cindy Bellford
Updated over a week ago

Total Profit (Wholesale)

The total net amount you will receive as profit from a wholesale.

Written by Cindy Bellford
Updated over a week ago

Post-Tax Profit (Wholesale)

The total net profit from a wholesale after subtracting the estimated income tax.

Written by Cindy Bellford
Updated over a week ago

Investment Returns

Capitalization Rate (Cap Rate)

A rate of return that compares the yearly NOI to the purchase price or market value.

Written by Cindy Bellford
Updated over a week ago

Cash on Cash Return (COC)

A rate of return that compares the yearly cash flow to the total invested cash.

Written by Cindy Bellford
Updated over a week ago

Return on Equity (ROE)

A rate of return that compares the yearly cash flow to your total equity in the property.

Written by Cindy Bellford
Updated over a week ago

Return on Investment (ROI)

The total return on your invested cash if you were to sell the property.

Written by Cindy Bellford
Updated over a week ago

Internal Rate of Return (IRR)

An average annualized rate of return on your invested capital.

Written by Cindy Bellford
Updated over a week ago

Financial Ratios

Rent to Value Ratio (RTV, RTP)

A ratio that compares the monthly gross rent to the purchase price or market value.

Written by Cindy Bellford
Updated over a week ago

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.

Written by Cindy Bellford
Updated over a week ago

Equity Multiple

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

Written by Cindy Bellford
Updated over a week ago

Break Even Ratio (BER)

The minimum occupancy needed to cover all operating expenses and loan payments.

Written by Cindy Bellford
Updated over a week ago

Loan to Cost Ratio (LTC)

The ratio between the loan amount and the acquisition costs of a property.

Written by Cindy Bellford
Updated over a week ago

Loan to Value Ratio (LTV)

The ratio between the loan amount and the market value of a property.

Written by Cindy Bellford
Updated over a week ago

Debt Coverage Ratio (DCR, DSCR)

A ratio that compares the yearly NOI to the yearly loan payments, often used for loan qualification.

Written by Cindy Bellford
Updated over a week ago

Debt Yield

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

Written by Cindy Bellford
Updated over a week ago

Miscellaneous

Total Equity

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

Written by Cindy Bellford
Updated over a week ago

Depreciation

A common income tax deduction available to real estate investors.

Written by Cindy Bellford
Updated over a week ago