Real estate investors use a variety of mathematical tools to analyze the performance of their investment properties. We've taken some of the most popular ones and explain their purpose and how to do these real estate investment calculations.
Once you've learned about them, download the spreadsheets. One is the Real Estate Investment Calculator Sheet, and the other is the same sheet with sample data in it to show you formats.
1. Gross Potential Income
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3. Gross Rental Multiplier
Though not the most precise of tools, the GRM can give you a quick comparison tool to decide on whether to do a more thorough analysis.
Get Gross Rental Multiplier help here.
5. Capitalization Rate
By using other properties' operating income and recent sold prices, the capitalization rate is determined and then applied to the property in question to determine current value based on income.
Capitalization Rate Calculation explained.
6. Cash Flow Before Taxes (CFBT)
We take net operating income and subtract capital cash expenditures as well as debt service, add back loan proceeds and interest income.
More on Cash Flow Before Taxes.
9. Return on Equity - Year One
This is the percentage return on your cash investment the first year.
More on Return on Equity
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