Speak Returns, Not Countertops: The Four Numbers Investors Live By

When you can talk fluently about cash-on-cash return and cap rate, an investor stops seeing you as just an agent. You do not need to be an accountant. You need four numbers, defined simply, used consistently.

1. Cash-on-cash return

Annual cash flow divided by the cash invested. It answers the question investors ask most: what do I earn on the money I actually put in? It is the number they live by.

2. Cap rate

Net operating income divided by the purchase price. It ignores financing, which makes it a quick way to compare one deal with another.

3. RevPAR for short-term rentals, rent premium for mid-term

For a short-term rental, revenue per available night is the nightly rate multiplied by occupancy. For a mid-term rental, the useful comparison is the monthly spread over what a standard unfurnished lease would earn.

4. Regulatory risk

This is the number that is not a number. Permit availability, caps, HOA rules, zoning and lender terms can change a deal’s value overnight. Treat it as a score you assign before any return is calculated. We cover the checklist in Underwrite the Rules Before the Returns.

Putting them to work

Quote all four in your analysis, in the same order, every time. Consistency teaches the investor how to read your work, and it makes comparing two properties effortless. The vehicle for all of this is a single page, which we build in Bring a Pro Forma, Not a Listing.