Real estate investment can be very profitable, but you do need to put in the effort to plan and calculate how you will make gains.

Gross Schedule Income (GSI)

The gross income schedule helps you calculate how much income your properties will generate if all your assets are rented and there are no delays or defaults. It gives you a good starting position to calculate from.

Gross Schedule Income = Sum of Rent from All Properties

Gross Operating Income (GOI)

The gross operating income calculates income from all sources in addition to your rental properties. It includes revenue from leased out assets, parking spaces and machines etc on your properties.

Gross Operating Income = GSI + Income from all other assets

Total Operating Expenses (TOE)

The total operating expenses measures all the expenses incurred for the general maintenance and repairs on all your properties. They include costs of property managers, repairs, insurance costs as well as taxes, HOA fees etc.

Total Operating Expenses = Expenses incurred on all properties for maintenance and repairs etc

Net Operating Income (NOI)

Calculate Net operating income by deducting all operating expenses from the gross operating income.

Net Operating Income = GOI – TOE

Capitalization Rate (CR)

Capitalization rate is an important real estate calculation. It compares the net operating income

on a property to its market value to assess which properties are generating a higher return on investment. It essentially tells you whether it is profitable to keep the property as a rental or sell it at its current market value.

Cap Rate = Net Operating Income from a Property / Market Value of the Property

Cash on Cash Rate (CoC)

This is another important ratio that helps investors determine how much cash they generate on their property investment. It helps evaluate which properties are the most profitable based on terms of financing.

Cash on Cash Return = Cash Flow / Total Cash Invested on Property

Return on Investment (ROI)

This is one of the most important rates. All investments are made to get a positive return and the higher the ROI, the better. The return on investment compares net annual returns on the property to initial and additional investments made over a period of time.

Return on Investment = Annual Returns / Cost of Investment

Debt Servicing Ratio (DSR)

This ratio is important when you look to get a property financed through a mortgage bank. Lending banks use this ratio to assess how much income the property will make each period compared to mortgage payments.

Debt Service Ratio = Net Operating Income / Debt Service

Price to Rent Ratio (PR Ratio)

This is another important ratio that shows how much rent you’ll receive compared to the price you considered to buy the property. A lower ratio is better because it shows you are getting higher rent.

Price to Rent Ratio = Purchase Price of Property / Gross Annual Rent Revenue

For more information, you can visit Real Estate Calculators.