Finance & Returns Net Operating Income (NOI) Gross income minus operating expenses, excluding debt service and capital expenditures.
Finance & Returns Net Present Value (NPV) The present value of future cash flows minus the initial investment.
Finance & Returns Net Yield Income after expenses divided by purchase price, expressed as a percentage.
Finance & Returns Operating Expense Ratio (OER) Operating expenses divided by gross income, expressed as a percentage.
Finance & Returns Payback Period The time required to recover the initial investment from cash flows.
Finance & Returns Real vs. Nominal Return Real return is inflation-adjusted; nominal is the stated return.
Finance & Returns Risk Premium Extra return above the risk-free rate to compensate for additional risk.
Finance & Returns Break-Even Ratio Operating expenses plus debt service divided by gross income, the point at which a property covers its costs.
Finance & Returns Cap Rate Net operating income divided by purchase price — a basic measure of unleveraged yield.
Finance & Returns Cash Flow The net amount of cash moving in and out of a property, after operating expenses and debt service.
