Annual Gross Rent Multiplier
The Annual Gross Rent Multiplier is the Purchase Price divided by the Gross Annual Rent.
Buying Costs
The Buying Costs are the closing costs paid by the buyer when purchasing the property.
Cap Rate (Purchase Price)
The Cap Rate (Purchase Price) is the Net Operating Income divided by the Purchase Price.
Cap Rate (Market Value)
The Cap Rate (Market Value) is the Net Operating Income divided by the Market Value.
Cash Flow
The Cash Flow is the Net Operating Income minus the Mortgage Payment.
Cash on Cash Return
The Cash on Cash Return is the Annual Cash Flow divided by the Initial Cash Invested.
Compounding Period
The Compounding Period is the time interval between the points at which interest is compounded. For example, US mortgages are compounded monthly, and Canadian mortgages are compounded semi-annually.
Cumulative Cash Flow
The Cumulative Cash Flow represents the total net Cash Flow to date.
Debt Coverage Ratio
The Debt Coverage Ratio is the Net Operating Income divided by the Mortgage Payment.
Downpayment
The Downpayment is calculated as the Purchase Price minus the First Mortgage and Second Mortgage amounts.
Equity
The Equity is the Market Value minus the Loan Balance.
Expense Inflation Rate
The Expense Inflation Rate is the percentage increase in the expense amounts from year to year.
Future Improvement Costs
The Future Improvement Costs are the expenses related to improving the property after the initial purchase.
Holding Costs
The Holding Costs are the ongoing costs required to maintain ownership of the property. They typically include things like mortgage payments, taxes, insurance, and utilities.
Income Inflation Rate
The Income Inflation Rate is the percentage increase in the income amounts from year to year.
Initial Cash Invested
The Initial Cash Invested is the sum of the Downpayment, Buying Costs and Improvement Costs.
Initial Improvement Costs
The Initial Improvement Costs are the up-front rehab and capital improvement expenses. These are typically made shortly after the purchase of the property, before the tenant moves in.
Initial Market Value
The Initial Market Value is the market value on the day that you purchase the property. If you're getting a good deal on the property, this is higher than the purchase price, and it results in instant appreciation.
Internal Rate of Return
The Internal Rate of Return is the interest rate that makes the Present Value of future cash flows equal to the Initial Cash Invested. You can also think of the IRR as the annually compounded interest rate that a bank would have to give you on a savings account to provide the same return as your real estate investment.
Loan-to-Cost Ratio
The Loan-to-Cost Ratio (LTC) is the Loan Balance divided by the Purchase Price of the property.
Loan-to-Value Ratio
The Loan-to-Value Ratio (LTV) is the Loan Balance divided by the current market value of the property.
Monthly Rent to Value Ratio
The Monthly Rent to Value Ratio is the Monthly Rent divided by the Purchase Price.
Net Operating Income
The Net Operating Income is the Operating Income minus the Operating Expenses.
Net Profit
The Net Profit is calculated as the Proceeds After Sale plus the Cumulative Cash Flow minus the Initial Cash Invested.
Operating Expense Ratio
The Operating Expense Ratio is the ratio of the Operating Expenses to the Operating Income.
Potential Cash-Out Refi
The Potential Cash-Out Refi shows you the amount of cash you could pull out of the property if you did a cash-out refinance based on the Loan-to-Value (LTV) for Refinance that you entered in the Assumptions.
Proceeds After Sale
The Proceeds After Sale are calculated as the Equity minus the Selling Costs. This is the amount of money you would receive when selling the property.
Purchase Price
The Purchase Price is the amount of money that you pay to purchase the property, not including closing costs, loan fees, and mortgages.
Return on Equity
The Return on Equity is the Annual Cash Flow divided by the current Equity in the property.
Return on Investment
The Return on Investment is the Net Profit divided by the Initial Cash Invested.
Sale Price
The Sale Price is the amount of money that you receive when you sell the property, not including closing costs.
Selling Costs
The Selling Costs are the closing costs paid by the seller when selling the property.
Vacancy Rate
The Vacancy Rate is the percentage of the year that the property is vacant. For example, one month of vacancy is equivalant to a vacancy rate of 8.3%.