Real estate investing, from first rental to advanced returns

Investment property is judged by numbers, and each number answers a different question. NOI and cap rate describe the property; cash flow and cash-on-cash return describe your deal with your financing; IRR and equity multiple describe the whole investment over time.

Learn them in that order. The beginner steps cover the first rental; the advanced steps cover the measures lenders and syndications use. Every ratio links to a calculator that uses the same math as the analysis behind it.

Your learning path

Work through the steps in order, or choose a level to see only the steps for where you are.

  1. STEP 1Beginner

    Understand the income

    Every investment ratio starts from net operating income.

  2. STEP 2Beginner

    Price the property

    Cap rate tells you what you pay for each dollar of income - and whether that is fair.

  3. STEP 3Intermediate

    Check the deal after financing

    A good property can still be a poor investment once the mortgage is paid.

  4. STEP 4Intermediate

    Budget for the real costs

    Vacancy and repairs are certain; leaving them out is the most common analysis error.

  5. STEP 5Intermediate

    Choose a strategy

    Buy-and-hold, BRRRR and flipping use the same numbers in different ways.

  6. STEP 6Advanced

    Measure the whole investment

    IRR and equity multiple capture timing and the sale; lenders add DSCR and debt yield.

Important terminology

The terms you will meet on this path, from the essentials to the specialist vocabulary.

All investing terms in the glossary →

Featured guides

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Calculators for this path

Common questions

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Advanced resources

For when you want the full detail - formulas, methodology and professional measures.

Apply it to a property

Paid analyses that work through these steps for a specific address.

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