Debt coverage ratio is the real estate ratio between the annual net operating income (NOI) and annual debt service (ADS) of the particular property. ADS is the total of 12…
Category: Real Estate Terms & Definitions
In this category there will be posted all definitions of various ratios and calculations, used in the real estate analysis and our free real estate investment software. Feel free to comment or ask about any term.
Internal Rate of Return (IRR)
Internal Rate of Return (annualized yield rate) is a rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces…
Profitability Index (PI): Real Estate Analysis
Profitability index (profit index) is very similar to NPV. It also calculates with the present values of future cash flows and discount rate, therefore it takes in account the time…
Net Present Value (NPV) in Real Estate
Net Present Value is probably the best measure of any investment thanks to its complexity. It takes into account all the future cash flows including the selling price, and it…
Break-Even Ratio (BER)
After a week, there is another term in our Real Estate Dictionary for all investors hungry for definitions! This one will definitely help you with your property analysis, especially if…
Operating Expense Ratio
Operating expense ratio is the ratio of operating expenses to the gross operating income (GOI). It is advisable to count this ratio not only on the total of operating expenses,…
Cash Flow (CFBT and CFAT)
Cash flow is probably the first term which real estate investors learn in property analysis. It simply represents all the inflows and outflows of cash for a certain property. Next…
Taxable Income
After a while, here is another definition of an Real Estate Analysis term – the taxable income. Taxable income is the amount on which the taxes have to be paid….
Net Operating Income (NOI)
Net operating income is one of the most important measures of property’s profitability. The NOI is simply the gross operating income minus operating expenses. Something of importance to realize is…
Gross Operating Income
The gross operating income equals the property’s annual gross scheduled income, less vacancy and credit loss (uncollectable rent). It is the actual income which is expected to be collected in…