Real Estate Investment Formula Cheat Sheet
Every core rental and flip formula on one page - NOI, cap rate, cash flow, cash-on-cash, DSCR, GRM, the 70% rule, ROI and LTV - with links to each explanation.
The formulas below are the same ones the glossary and Reaixo's calculators use. Ratios are industry conventions, not regulations, so always check how a figure you are given was calculated.
Income and value
- Net Operating Income
NOI = Gross Rental Income − Operating ExpensesNet operating income (NOI) is a property's yearly income from rent and other sources minus its operating expenses, before mortgage payments, depreciation and income taxes. - Cap Rate
Cap Rate = Net Operating Income ÷ Property Value × 100Cap rate (capitalization rate) is a rental property's net operating income divided by its price or value, shown as a percentage. - Gross Rent Multiplier
GRM = Property Price ÷ Gross Annual Rental IncomeThe gross rent multiplier (GRM) is a quick screening ratio that divides a property's price by its gross annual rent, before any expenses. - Vacancy Rate
Vacancy Rate = Vacant Days ÷ Total Days × 100Vacancy rate is the share of time a rental property - or the share of units in a market - sits empty and earns no rent.
Returns
- Cash Flow
Cash Flow = NOI − Debt ServiceCash flow is the money left over from a rental property's income after paying all operating expenses and debt service — positive cash flow means the property generates more than it costs to run and finance. - Cash-on-Cash Return
Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100Cash-on-cash return is a rental property's annual pre-tax cash flow divided by the total cash invested, such as the down payment, closing costs and initial repairs. - Return on Investment
ROI = (Gain from Investment − Cost of Investment) ÷ Cost of Investment × 100ROI (return on investment) measures the total gain from an investment relative to its cost, expressed as a percentage.
Financing
- DSCR
DSCR = NOI ÷ Annual Debt ServiceDSCR (debt service coverage ratio) is a property's net operating income divided by its annual loan payments. - Loan-to-Value
LTV = Loan Amount ÷ Property Value × 100Loan-to-value (LTV) is the loan amount divided by the property's value - for a purchase, usually the lower of the price and the appraisal - shown as a percentage. - Debt-to-Income Ratio
DTI = Total Monthly Debt Payments ÷ Gross Monthly Income × 100Debt-to-income ratio (DTI) is the share of your gross monthly income that goes to debt payments, including the proposed mortgage payment.
Flips
- 70% Rule
Maximum Offer = (ARV × 70%) − Estimated Repair CostsThe 70% rule is a fix-and-flip screening formula: pay no more than 70% of a property's after-repair value (ARV), minus the estimated repair costs.
Remember
Calculators and guides
Sources and review
No regulator defines these formulas; they follow common industry practice.
Where this applies: Not regulated. Investment ratios are industry conventions; lender definitions may differ.
Last reviewed: · Updated:
Worked examples use illustrative round numbers, not current market data. Rates, limits and program rules change - confirm current figures with your lender or a qualified professional.
Educational information only - not financial, legal, tax or real estate advice. Rules and costs vary by loan program, contract and location; confirm with your lender, agent, attorney or tax professional. © Reaixo. Free to print and share unaltered with attribution.