When evaluating if a deal is worth proceeding or not, it is important to calculate its Expense Ratio. Ideally, if the current property owner or property manager maintains good records, it is very easy to obtain last 12 months (T-12) records so we have some solids numbers to work with. There are 2 types of…
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CoC ROI – Cash on Cash Return on Investment
When I first came up with the idea of blogging around CoC ROI, or Cash on Cash Return on Investment, I was more thinking from a traditional, document what this means kind of angle. But recently, I read an article which tries to disrupt the traditional thinking and I would like to make an attempt…
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CAP Rate – Capitalization Rate
CAP Rate is one of the most important indicators, if not the most important indicator, for real estate investors to evaluate deals. What CAP Rate gives us is an unbiased view when comparing properties side-by-side. To begin, let’s start off with the formula: CAP Rate = NOI / Property Price As you can see, the…
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NOI – Net Operating Income
There are several commonly-used metrics that a real estate investor uses to analyze the potential of any given opportunity. We will start with some basics and then gradually move into some of the more advance concepts. To begin the series, we will talk about Net Operating Income. Net Operating Income, or NOI for short, is…