This is when the terms cap rate and revenue multiplier are used.

Recently, I read Brandon Turner's real estate investing book, and now I'm torn between two strategies.On one hand, I could start small with single-family homes and gradually multiply my investments over the next five years.

Other methods, in addition to the discounted NOI and gross income multiplier approach, are also frequently used.

  $20K * 1.05^25.Then multiplied that by 25 realizing this number provides a far worse number than actual because I used only the worse year multiplied by 25. 

If they have a large operation that gets multiplied out.

I may ask him to deliver the property with her rent increased to $700 or ask for a reduction in the sales price based on the gross rent multiplier calculation.

A 100 year old structure with an original brick foundation and knob & tube wiring will cost more to insure than a 20 year old structure that has a modern foundation and modern electrical, so with that in mind obviously you can't just multiply the purchase price by a % and get an accurate number. 

Diversify and multiply.

The real big money is earned from multi-unit properties no less than a 4-plex where rent increases cause the property to increase in value almost exponentially when you consider the Gross Multiplier as in the image below.Cashflow is great, but you definitely need to crunch the numbers for every scenario.You also need to be careful in regards to what you believe and who you listen to.

 #4 I multiplied that figure by .7 ( 30% +/- profit).