by propertizeco 𝐒𝐞𝐯𝐞𝐫𝐚𝐥 𝐤𝐞𝐲 𝐧𝐮𝐦𝐞𝐫𝐢𝐜 𝐟𝐚𝐜𝐭𝐨𝐫𝐬 𝐭𝐡𝐚𝐭 𝐚𝐫𝐞 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐭𝐨 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐰𝐡𝐞𝐧 𝐞𝐯𝐚𝐥𝐮𝐚𝐭𝐢𝐧𝐠 𝐚 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲 𝐨𝐫 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐨𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐲:
𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞: The current value of the property, which is determined by various factors such as location, size, condition, and recent sales of similar properties in the area.
𝐑𝐞𝐧𝐭𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞: The amount of rent that can be charged for the property, which is influenced by the location, size, amenities, and overall demand in the rental market.
𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐞𝐱𝐩𝐞𝐧𝐬𝐞𝐬: The ongoing costs of maintaining and operating the property, which include property taxes, insurance, maintenance, repairs, and utilities.
𝐂𝐚𝐬𝐡 𝐟𝐥𝐨𝐰: The amount of money left over after all operating expenses are subtracted from the rental income.
𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 (𝐑𝐎𝐈): The measure of the profitability of the investment, calculated as the percentage of the initial investment that is returned as profit over a certain period of time.
𝐂𝐚𝐩 𝐫𝐚𝐭𝐞: A measure of the property’s income potential, calculated as the net operating income divided by the property value. The cap rate is used to evaluate the potential return on investment.
𝐆𝐫𝐨𝐬𝐬 𝐫𝐞𝐧𝐭 𝐦𝐮𝐥𝐭𝐢𝐩𝐥𝐢𝐞𝐫 (𝐆𝐑𝐌): A ratio used to determine the value of a property based on its rental income. The GRM is calculated by dividing the property value by the annual rental income.
𝐃𝐞𝐛𝐭 𝐬𝐞𝐫𝐯𝐢𝐜𝐞 𝐜𝐨𝐯𝐞𝐫𝐚𝐠𝐞 𝐫𝐚𝐭𝐢𝐨 (𝐃𝐒𝐂𝐑): The measure of a property’s ability to generate enough income to cover its mortgage payments. The DSCR is calculated by dividing the property’s net operating income by its total debt service.
𝐀𝐩𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧: The increase in value of the property over time, which is influenced by market trends, location, and improvements made to the property.
𝐄𝐪𝐮𝐢𝐭𝐲: The portion of the property’s value that is owned outright by the owner, calculated as the difference between the property’s market value and any outstanding debts or mortgages on the property.
