General Terms & Formulas

We are Losness Group, Investment Real Estate.  We are specialists in Multi-family housing (apartments).

CAP rate- A rate of return used to derive an income stream based on all income and expenses of the property, with no consideration for debt service.. This term is a measuring stick as to how an income property will perform.  The CAP rate differs significantly between 2-4 unit properties and 5+ unit buildings.

Net Operating Income (NOI) / Price.

GRM (gross rent multiplier)-  A rate of return used to derive income stream based on all the  income the property produces, with no consideration for expenses or debt service. This term is a measuring stick as to how an income property will perform. The GRM differs significantly between 2-4 unit properties and 5+ unit buildings.

Price / Scheduled Gross Income (SGI).

Debt Service– The periodic payments, usually principal and interest, made on a loan.  Expresses annually.

NOI (net operating income)-  Incomes from a property after operating expenses and vacancy have been deducted.  Expressed annually.

Price x CAP.

Cash Flow– Refers to the amount a property makes after all expenses and the loan are paid off.  Expressed annually.

NOI – Debt Service.

Principle Reduction–  This refers to the amount of principal gained back in 1 year of loan payments.  Expressed annually.

Principal Reduction = Debt Service – (Total loan amount x Interest rate).

Debt Coverage Ratio–  This is a tool used by lending companies to ascertain the most amounts of loan dollars they will lend on a property.

NOI / Debt Service.

Cost per Unit– Price / number of units

Price per Square Foot– Price / square feet of property.

Scheduled Gross Income (SGI)– The amount of money an apartment produces in 1 year, before expenses and vacancy are applied.

Gross Income– SGI – Vacancy.

% of Return–  The percentage relationship between earnings and the cost of an investment.

Cash Flow / Down Payment.

Price–  NOI / CAP

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