Investment Ratio Definations
Net Operating Income (NOI)
Income- Vacancy + Other Expenses
Future Value (FV)
The value of a dollar in the future invested at a rate or
return over a period of time.
Present Value (PV)
The value of a dollar received in the future discounted to
today's dollars at a rate of return.
Net Present Value (NPV)
The amount less or more than the initial down payment the
investor can afford to pay at "time period zero"
to achieve the desired rate of return. Also referred to as
NPV.
Loan To Value (LTV)
The ratio of the amount of loan available on the property
to the price.
Cash on Cash Flow
The ratio of the total costs of acquisition to the Property's
cash flows.
Pre-Tax Cash Flow
Cash flows taken before income tax is assumed
After Tax Cash Flow
Cash flows after income taxes are paid from monies.
Gross Rent Multiplier
The ratio of the total price of the project to the gross scheduled
income without regard to vacancy factor or expenses.
Debt Coverage Ratio
The property's ability to service the debt. Expressed as a
#. NOI/ADS
Annual Debt Coverage (ADC)
Annual amount of interest and principal paid on debt.
Captalization Ratio
Annual amount of interest and principal paid on debt.
Internal Rate of Return (IRR)
The amount of return on each dollar invested as it stays in
the investment (uneven cash flows).
Intiial Investment
Down payment + other costs of Acquisition.
Gross Scheduled Income
Total possible rents, not accounting for vacancy or expenses.
