The Investor Lab The Hidden Numbers That Every Property Investor Should Know
Every so often, financial jargon gets thrown around and while they’re all actually used in the real estate space, they’re not always used in the right context.
When you talk about Return on Investment or ROI, do you actually mean Return on Capital? And what is that about, really?
Or perhaps you consider principal payments a burden when in fact, it’s actually PROFIT for your property?
If this sounds like you (or someone you know), this episode is exactly what you need to dive into. Today, we cover terms like Return on Capital, Internal Rate of Return, Debt Service Coverage Ratio or DSCR, what metrics to look out for, and get to the bottom of what they are and what they should mean to you as an investor.
We also talk about the 2 metrics you should focus on to know if you should invest or not…
The key to a healthy, growing business…
Cash-on-Cash Return or ROI…
And lots more.
See you on the inside!
In this episode, we cover:
- Correct property terms used in the wrong context [05:10]
- Return on Capital vs Return on Investment [09:32]
- How about ROI vs Internal Rate of Return? [16:44]
- How to measure cash flow as it relates to investment [21:24]
- Explaining Net Operating Income [22:54]
- Debt Service Coverage Ratio [24:37]
- Net Cash Flow or Net Yield [27:18]
- Cash-on-Cash Return (also known as COI) [29:53]
- The 2 metrics you should focus on to know if you should invest in an asset [31:29]
- Circling back to ROI vs Cash-on-Cash Return [32:25]
- Principal payments are profits, not cost of debt [33:05]
- The key to a healthy, growing business [36:39]
Link/s from the show:
- Investopedia: https://www.investopedia.com
- Property Metrics: https://propertymetrics.com
Connect With Us:
- The Investor Lab Membership (https://theinvestorlab.com.au/jointhecommunity)
- Dashdot Buyers Agents Website (https://www.dashdot.com/au/)
- Limitless: The Renegade’s Guide to Building Wealth Through Property - Goose McGrath (https://www.renegadespropertybook.com)
- Ready to work with us directly? (https://dashdot.as.me/discoverycall)
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