We recently launched our new property investment analysis tool on our website. The tool is designed to help you calculate some key performance measures to take into consideration while analyzing different real estate investments. The focus here is on actual quantitative numbers and not on potential appreciation. Some of the results that you can calculate with the analysis tool are explained here.
CAP RATE (Capitalization Ratio);
The cap rate is determined by dividing the net operating income by the sales price of the asset. The cap rate is one measure of the potential rate of return on the real estate investment.
NOI (Net Operating Income);
The net operating income is determined by subtracting operating expenses from the gross revenue generated by the property.
NIM (Net Income Multiplier);
To determine NIM you divide the sales price of the rental property by the net income it generates in a given period of time. It is used to judge how effective an asset is at generating income compared to its market price.
DSCR or DCR (Debt Service Coverage Ratio);
DSCR is the ratio of cash available for debt servicing to interest, principal and lease payments. It is used as a benchmark to determine the measurement of an income producing property’s ability to produce enough cash to cover the debt against it. The higher this ratio is, the easier it is to obtain a loan.
To use our investment analysis tool you can go to this page on our website: CLICK HERE
The information generated by the use of our investment analysis tool is for informational purposes only. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. We have not verified it and make no guarantee, warranty or representation about the results. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.