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Value Indicators

A brief explanation for some of the key value indicators that investors look at when evaluating the purchase of an investment property can be found below.

Gross Rent Multiplier or GRM:

Sale Price = GRM x Gross Income

GRM = Sale Price/Gross Income

Capitalization Rate:

Sale Price = Net Operating Income / Cap Rate

Cap Rate = Net Operating Income / Sale Price

Net Operating Income = Sale Price x Cap Rate

Price Per Unit:

Sale Price = # Of Units x Price Per Unit

Price Per Unit = Sale Price / # Of Units

Price Per Square Foot:

Price Per Square Foot = Sale Price / Total Rental Square Feet

Cash On Cash:

Cash On Cash = Cash Flow After Debt Service / Down Payment