Calculators

Capitalization Rate

Property Value Based on a Net Return Via Capitalization Rate

Calculating Property Value Based on a Net Return Via Capitalization Rate The common measure of rental real estate value based on net return rather than gross rental income is the Capitalization Rate (or Cap Rate). In contrast to the GRM, the Cap Rate is not a multiplier but a rate of annual return.Before you can …

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Debt Coverage Ratio

How is the Debt Coverage Ratio (DCR) Calculated?

What Is a Debt Coverage Ratio (DCR)? Debt Coverage Ratio (DCR), sometimes known as the Debt Service Coverage Ratio (DSCR), compares an investment property’s Net Operating Income (NOI) with its debt service.Lenders use this ratio to calculate whether or not you will be able to generate enough income to pay your debts. Most commercial lenders …

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Loan to Value

What is a Loan to Value Ratio (LTV) and How Is It Calculated?

Loan to Value Ratio (LTV) What Is It?When considering how to invest in real estate, one term you may see come up time and again is loan to value ratio (LTV). It is a lending risk assessment ratio that lenders examine before approving a loan.How Is It Calculated?The LTV is determined by what percentage an …

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Gross rent multiplier

What is Gross Rent Multiplier (GRM?)

WHAT IS GROSS RENT MULTIPLIER? The ratio of a property’s price to gross rental income. It tells you how long it will take for an investment property to pay for itself. For a prospective real estate investor, a lower Gross Rent Multiplier (“GRM”) represents a better investment opportunity. Similar to other property valuation methods, GRM is effective …

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