A word to the wise:
Define what expenses are factored into YOUR Net Operating Income. Don’t use anybody else’s NOI figure. COMPUTE YOUR OWN!!
How to Choose Investment Opportunities
Submitted by Curt Amesbury Anyone who wishes to invest in real estate for wealth building and/or income generation should have a good accountant or CPA. That being said, here are two quick “back of the envelope” ratio models that many experienced investors use to see if the investment property makes economic sense: GROSS RENT MULTIPLIER GRM = Purchase Price/Annual Rental Income CAPITALIZATION RATE CAP RATE = Net Operating Income/Purchase Price