15 Calculations YOU NEED TO KNOW as a Real Estate Investor

[Lauren DeFreitas]

Cap Rate: NOI divided by sales price

GRM (Gross Rent Multiplier): sales price divided by SGI

NOI (Net Operating Income): SGI minus vacancy & expenses

DCR (Debt Coverage Ratio): NOI divided by debt service

Depreciation: sales price x 85%, divided by 27.5

REO (Return On Equity): Cash Flow divided by equity

ROI (Return On Investment): Cash Flow divided by down payment

SGI (Schedule Gross Income): income before vacancy & expenses

Vacancy (depends on market): 5% of SGI

Cash Flow: NOI divided by Cap Rate

GOI (Gross Operating Income): SGI minus vacancy

Value: NOI divided by Cap Rate

Value: SGI x GRM

Expenses: 35% of GOI

Max Debt: NOI divided by Debt Coverage Ratio