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Property Analysis Metrics
Property Analysis Metrics
Learn what the different property analysis metrics mean and how they're calculated.
36 articles in this collection
Written by
Cindy Bellford
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
70% Rule
States that the purchase price of a property should be less than or equal to 70% of its ARV, minus the rehab costs.
Written by
Cindy Bellford
Updated over a week ago
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
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 a 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 a 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 you will pay 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
Depreciation (Rental & BRRRR Properties)
Depreciation
A common income tax deduction available to real estate investors.
Written by
Cindy Bellford
Updated over a week ago
Property Sale
Total Equity
The actual portion of a property's market value that you own.
Written by
Cindy Bellford
Updated over a week ago
Total Profit (Rental Properties)
The total cumulative profit you will receive if you were to sell a rental property.
Written by
Cindy Bellford
Updated over a week ago
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 a 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