Real Estate Investment Calculations

  • Gross Operating Income (GOI) Calculations:
    Income Gross Rents
    + Other Income
    = Gross Operating Income
    – Vacancy Amount
    = Effective Gross Operating Income

Estimated Market Value = Net Operating Income / Market Cap Rate
Market Cap Rate is calculated by evaluating the current sales of similar income producing properties in the same market area.

  • Capitalization Rate (Cap Rate)
    = Net Operating Income / Market Value
  • Estimated Market Value
    = Net Operating Income / Cap Rate
  • Rent to Cost Ratio
    = Monthly Rent / Purchase Price
  • Debt Coverage Ratio
    = Net Operating Income / Debt Service
  • Return on Investment
    = Net income / Total Down Payment
  • Cash On Cash Return
    = Cash Flow Before-Tax / Cash Invested
  • Break Even Ratio
    = (Debt Servicing Cost + Operating Expenses) / Gross Operating Income
  • Price per Square Foot
    = Market Value / Property square footage
  • Rent per Square Foot
    = Rental Rate / Property square footage