Statistics, Formulas, & Time Frames

2 Replies

What are some of the formulas or stats that investors should look at regarding RE (I.e. GRM, ROI, Cash on cash, NOI, etc.)?

In which cases should you apply these formulas (I.e. flipping, rentals, turkeys, vacancies, etc.)?

What are some good numbers to aim for (I.e. GRM = 8.33, 1% rule for rentals, etc.)?

Hey Diego,

This is a great question, and really depends on what the investors goals are. For instance, a buy and hold investor who wants passive income may focus more on cash-flow. The same investor who isn't taking the cash out of the business may focus primarily on cash-on-cash returns. 

Those focused on commercial operations tend to focus on cap rates, which means they are also focused on NOI. NOI is part of the cap rate calculation.

If you really want to take a deeper dive on this question, please read:

"What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures, Updated Edition - Frank Gallinelli"

It goes in depth on this exact topic. 

I would advise you to pick an investing strategy to start with, and then focus on the relevant numbers for that strategy. If you're not sure, ask on the forum. Your current question is too broad. 

For instance, I am a buy-and-hold investor who uses the BRRRR strategy. My focus is cash-on-cash return, cash-flow, return on equity, and cash remaining in the deal.

"What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures, Updated Edition - Frank Gallinelli"

I think Frank was on a podcast done by Norada real estate investing and he did a great job of breaking these numbers down. Sorry I cant be more specific, but if you look up the Norada Passive Income podcast you should be able to find it pretty easily.

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