How to Calculate, Property Flip or Hold, Real Estate Investment
Gross Income – Total income of rent received from tenants to pay for the space. Vacancy Rate % – The percentage of time rental income is lost due to a property being not rented. Usually between 5% to 10% of the Gross Income. Other Income – Any...
How to Calculate, Property Flip or Hold, Real Estate Investment
Net Yield – Measures yearly cash flow to the after repair value (ARV). This metric takes into account all of the expenses including the debt service. Yearly Cash Flow ÷ After Repair Value —————————— =...
How to Calculate, Property Flip or Hold, Real Estate Investment
Debt Yield – Measures yearly net operating income (NOI) to the loan amount. This metric is used to determine the risk of a loan. Provides lenders a measure of risk independent of interest rate and amortization periods. Yearly Net Operating Income ÷ Loan Amount...
How to Calculate, Property Flip or Hold, Real Estate Investment
Gross Rent Multiplier (At Purchase) – Measures the purchase price to its annual gross income. The GRM is the number of years it takes to pay for the purchase price via gross income. Purchase Price ÷ Gross Income (1st Year)...
How to Calculate, Property Flip or Hold, Real Estate Investment
Rent to Value (At Purchase) – Measures the monthly gross income to the purchase price. The higher the rent to value ratio, better the investment. Gross Income ÷ Purchase Price —————————— = Rent to...
How to Calculate, Property Flip or Hold, Real Estate Investment
Internal Rate of Return — The IRR measures a properties long term profitability by taking into account the annual net cash flow and the change in equity over time. Calculating IRR, the rate of return formula sets Net Present Value (NPV) to zero. With the property...
