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...
How to Calculate, Property Flip or Hold, Real Estate Investment
Return on Investment (1st Year) — The net profit made on an investment to the total investment. (((Equity – Projected Soft Cost) + Cumulative Cash Flow) – Total Investment) ÷ Total Investment...
How to Calculate, Property Flip or Hold, Real Estate Investment
Equity Multiple (1st Year) — The total cash return over the life of an investment. ((Equity – Projected Soft Cost) + Cumulative Cash Flow) ÷ Total Investment —————————— = Equity Multiple (1st Year)...
How to Calculate, Property Flip or Hold, Real Estate Investment
Return on Equity (1st Year) — Return received based on rent related to the property equity. Cash Flow (1st Year) ÷ Equity (1st Year) —————————— = Return on Equity (1st Year) $29,833 ÷ $645,358...
How to Calculate, Property Flip or Hold, Real Estate Investment
Equity After Refinance — The equity left in the property. ARV – Loan Amount —————————— = Equity After Refinance $2,000,000 – $1,440,000 ———— =...
