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How to Calculate Rent to Value (At Purchase)

Tuesday, March 01

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 Value (At Purchase)        $22,400÷ $1,800,000-------------------= 1.24%


How to Calculate Internal Rate of Return (IRR)

Monday, February 28

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 Initial Total Investment, Cash ...


How to Calculate Return on Investment (ROI — 1st Year)

Saturday, February 26

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---------------------------------------------------= Return on Investment (1st Year)   ((($645,358- $0)+...


How to Calculation Equity Multiple (1st Year)

Friday, February 25

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)   (($645,358- $0)+ $29,832)÷ $410,400-----------------= 1.65%


How to Calculate Return on Equity (1st Year)

Thursday, February 24

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-----------------= 4.62%


How to Calculate Equity at Purchase or After Refinance

Wednesday, February 23

Equity After Refinance — The equity left in the property.   ARV- Loan Amount------------------------------= Equity After Refinance     $2,000,000- $1,440,000------------= $560,000