Investor Approach
I. Gross Rent Multiplier Method
Example: (1)
Offering Price ÷ Gross Rents = Gross Rent Multiplier
II. Direct Capitalization Method
|
“IRV Formula”
|
| I = Net Operating Income |
| R = Cap Rate or Rate of Return |
| V = Market Value |
Example: (2)
 |
= Basic IRV Formula |
 |
= R (Return) |
 |
= V (Value) |
 |
= I (Net Operating Income) |
III. Cash on Cash Method (Income Approach)
Example: (3)
| Cash Flows (Before Taxes)____ Cash Invested (Down Payment) |
= Cash on Cash Return |
