Learn how to calculate and use the most important property analysis metrics.
Note: This article describes the ROI calculation specifically for rental properties, and not flips and rehab projects, which is calculated differently. The return on investment, abbreviated as ROI, is one of the primary metrics of profitability and a measure of the...
The debt yield is an indicator of leverage and loan risk that is often used by real estate lenders when underwriting loans for rental properties, especially when working with commercial real estate. In simple terms, debt yield can be used to estimate how long it will...
Note: This article describes the ROI calculation specifically for flips and rehab projects, and not rental properties, which is calculated differently. The return on investment, abbreviated as ROI, is a primary measure of investment return used by investors when...
The return on equity, abbreviated as ROE, is a measure of investment return that can be used to evaluate and compare rental properties, as well as assess their future performance. The ROE is similar to the cash on cash return (COC), but instead of using the initial...
The so-called 50% Rule is commonly used by real estate investors as a quick rule of thumb to estimate rental property expenses, as well as occasionally used as investment criteria when evaluating rental properties. Although the rationale behind this rule is based on...
The rent to price ratio (RTP), also called the rent to value ratio (RTV), is often used by rental property investors when evaluating potential rental markets and specific investment properties. This ratio can be used as a quick indicator to determine whether a...
The cash on cash return, often abbreviated as COC, is a popular measure of investment return used when evaluating residential and commercial rental properties. The COC shows a projected cash yield you will receive from a rental property and can be used both to compare...
The debt service coverage ratio (DSCR), also called the debt coverage ratio (DCR), is often used by real estate lenders when underwriting loans for rental properties, especially when working with commercial real estate. The DSCR is an indicator of whether a property's...
The break-even ratio, abbreviated as BER, is most commonly used as un underwriting criteria by commercial real estate lenders, although it is a useful metric to know when analyzing any rental property. The break-even ratio shows the minimum percentage of occupancy...
The gross rent multiplier, abbreviated as GRM, is an indicator of rental property performance, commonly used to evaluate and compare both residential and commercial rental investments. In simple terms, this property analysis metric shows you the number of years it...
