I am repeatedly asked by clients and developers to help determine the ROI for various types of real estate investments. Please note the following simplified list of approaches.

·          Sales Comparison Approach

·          Gross Rent Multiplier Approach

·          Direct Capitalization Approach

·          Cash on Cash Approach

·          Demographic/Trends Approach

The following approaches take into account the Time Value of Money (TVM), so you can compare real estate investment with other investment types

·          IRR (Internal Rate of Return)

·          Net Present Value (NPV)

·          Capital Accumulation

Please call me to learn about or further understand how to make use of these approaches as you make investment decisions.

Commonly Used Terms:

Net Operating Income (NOI) = Income - Expenses. The income projected from a property after deducting losses from vacancy, collection and operating expenses.

Capitalization Rate = NOI/Purchase Price

Cash Return on Investment = NOI/Down Payment

Triple Net Lease or Net Net Net Lease (Commercial): A lease requiring the tenant to pay all operating and other expenses. Including costs incurred in maintaining the property, and fees for insurances, utilities and repairs.

Gross Lease (Commercial): The tenant pays a fixed rent and the landlord pays taxes, insurance, repairs and utilities and operating expenses and the like related to the property.

Percentage Lease (Commercial): Rent is based on a fixed price plus a percentage of gross income received by the tenant doing business.

Tax Deductions

Owner Occupied Property	Residential Investment Properties
Mortgage Interest City Real Estate Taxes Loan Origination Fees Loan Discount Points Loan Prepayment penalties	The NOI loss on a rental property up to 25K. (At certain income levels, writing off this loss must be deferred until you sell) Depreciation on Residential Property - 27.5 years.