Common Real Estate Investment Financial Ratios
Capitalization Rate (Cap Rate)
Net Operating Income (NOI) / Sales Price
Net Operating Income = $50,000
Sales Price = $800,000
$50,000/$800,000 = 0.0625 = 6.25%
Cash Return on Investment (Cash ROI)
Remaining Cash after Debt Service / Cash Investment
Total Return on Investment (Total ROI)
Remaining Cash after Debt Service + Principal Reduction / Cash Investment
Debt Service Coverage Ratio (DSCR)
Net Operating Income (NOI) /Debt Payment
Gross Rent Multiplier (GRM)
Purchase Price / Gross Scheduled Income
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