Cash Flow After Debt
The cash flow of each property is calculated by subtracting operating expenses and capital expenses from the property’s revenue. For properties financed with mortgage debt, debt service payments will be further subtracted from the property’s cash flow and the remaining value is called cash flow after debt service.
Debt-Service Coverage Ratio (DSCR)
The debt-service coverage ratio applies to corporate, government, and personal finance. In the context of corporate finance, the debt-service coverage ratio (DSCR) is a measurement of a firm's available cash flow to pay current debt obligations. The DSCR shows investors whether a company has enough income to pay its debts.
Return on Investment (ROI)
In commercial real estate, return on investment (also known as ROI), is a measurement of how much money an investor receives from an investment after all expenses have been deducted.
Capitalization Rate (Cap Rate)
The capitalization rate (also known as cap rate) is used in the world of commercial real estate to indicate the rate of return that is expected to be generated on a real estate investment property.
This measure is computed based on the net income which the property is expected to generate and is calculated by dividing net operating income by property asset value and is expressed as a percentage. It is used to estimate the investor's potential return on their investment in the real estate market.