When you need a way to compare the returns on different investment properties.
To evaluate the success of an investment after its first year.
Debt Service Coverage Ratio (DSCR)
To evaluate the viability of an investment from a lending perspective.
When looking for a quick sign a potential commercial deal (multifamily or otherwise) is worth considering.
In context with institutional investors. Gross yield uses the same values as rent-to-cost.
Internal Rate of Return (IRR)
To put your ROI in perspective with your initial outlay of money or compare investment opportunities in different asset classes.
If you need to quickly determine if a potential rental is worth evaluating further.
Return on Investment (ROI)
To get a “whole picture” of a future investment or a completed investment.
The 50% Rule
When you need a fast estimate for operating expenses.
The 70% Rule
To determine the strike price most optimal for solid profits on a potential investment.