The most important figure is [size=18]Net Operating Income[/size] (NOI) The amount remaing after total operting expensee (excluding interest payments) are deducted from effective gross income. In short this figure show what the property is making and should come from the tax returns. (The higher the better.)
Debt Service coverate ratio = Annual net operating income divide by annual principle and interest payments (mortgage payment). A DSCR of 1.52% means that the property is making 52% a lender normally requires 1.25% This figure depends on loan amount, interest rate and loan term.
CAP rate = Purchase price or Value divided by net operating income.
What a CAP rate should be is determine by market and property type.
The numbers have to be verified from tax returns. Cash income or unverified income is worthless.
