Which Metrics are you using?

[Ryan Gravel]

Hey BP´s!! I wanted to hear from everyone what your choice metrics you use to calculate and determine a great real estate investment (Particularly 4 + Unit MF) CAP rate, ROI, IRR, Rent/Price Ratio, Cash on Cash Return, 50% rule, 70% rule?

[Ben Leybovich]

Originally posted by @Andrew Syrios:

For houses, by far our most important is ARV, or more accurately All in Cost / ARV. (We aim for 75%.) We also look at Rent to Cost and Projected (and real after owning it for a while) cash flow. With apartments, it's the cap rate. We project ROI and IRR as well, but we aren't as good as we should be. I know Ben Leybovich would be mad at me about that.

I am furious!

Actually, ARV is the most important metric in apartments as well. The mechanics of getting there are very different, but the concept is the same. Cap rate is not a metric of return. It's used as a multiplier for means other than return.