Investment Property Value Calculator: Formulas & Metrics

Accurate property valuation requires multiple metrics working together. Here are the essential formulas every serious investor needs to know.

Cap Rate

Cap Rate = NOI ÷ Purchase Price
Best for: Comparing similar property types in the same market. Does not account for financing.

Gross Rent Multiplier (GRM)

GRM = Purchase Price ÷ Annual Gross Rents
Best for: Quick screening of deals. LA multifamily GRMs typically range from 10–18 depending on submarket.

Cash-on-Cash Return

CoC = Annual Pre-Tax Cash Flow ÷ Total Cash Invested
Best for: Evaluating leveraged returns. Includes mortgage payments, which cap rate ignores.

Net Operating Income (NOI)

NOI = Effective Gross Income - Operating Expenses
The foundation of all income-based valuations. Excludes debt service and depreciation.

Debt Service Coverage Ratio (DSCR)

DSCR = NOI ÷ Annual Debt Service
Lenders require DSCR of 1.20–1.25x minimum. Anything below means the property doesn't generate enough income to cover the mortgage.

Internal Rate of Return (IRR)

IRR is the annualized return including cash flows AND the projected sale price. For a 5-year multifamily hold in LA, a target IRR of 12–18% is reasonable depending on leverage and market conditions.

Want help running these numbers on a specific property? Contact Samimi CRE Advisors for a free analysis.