Property Analysis Metrics
Learn what the different property analysis metrics mean and how they're calculated.
By Cindy1 author69 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.
- Financing ExpensesOne-time expenses you will pay when refinancing a property or paying balloon payments.
- 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.
- Rental PotentialAn estimate of a property's potential to be a profitable rental.
- Flip PotentialAn estimate of a property's potential to be a profitable flip.
- Price DiscountThe difference between a property's listed price and its estimated market value.
- Negotiation PotentialAn estimate of how likely a property's price can be negotiated with the seller.