Property Flip or Hold – How to Calculate Hold Assumptions Rent – Mo. Projections

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...

Property Flip or Hold – How to Calculate Net Yield

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 —————————— =...

Property Flip or Hold – How to Calculate Debt Yield

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...

Property Flip or Hold – How to Calculate Debt Coverage Ratio

Real Estate Investment

Debt Coverage Ratio – Measures cash flow by comparing net operating income (NOI) to the debt service (PI). A DCR (also known as DSCR debt service coverage ratio) of 1 means you have an equal amount of income and debt which leaves no room for surprise expenses. A...

Property Flip or Hold – How to Calculate Break Even Ratio

Real Estate Investment

Break Even Ratio – Measures what occupancy percentage of the property must be rented to cover all expenses including debt service. Loan Principal & Interest + Taxes + Insurance + Property Management + HOA + Other Expenses ÷ Gross Income...

Property Flip or Hold – How to Calculate Gross Rent Multiplier (At Purchase)

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)...