Intermediate1.5 hours8 terms

REI Equity Multiplier: Essential Terms

This collection offers carefully selected key terms that might be helpful when exploring the Equity Multiplier in real estate investment. It's designed as a quick reference to understand commonly referenced concepts and calculations. Use it to clarify terminology you may encounter in financial analysis.

Term Collection

Equity Multiplier

The Equity Multiplier is a financial leverage ratio that measures the proportion of a company's assets financed by shareholders' equity, indicating how much debt is used to finance assets and amplify returns.

Advanced5 min

Return on Equity

Return on Equity (ROE) is a financial metric that measures the profitability of a real estate investment in relation to the equity invested, indicating how efficiently an investor is using their capital to generate profits.

Intermediate15-18 min

Debt Service Coverage Ratio

The Debt Service Coverage Ratio (DSCR) is a financial metric used in commercial real estate lending to assess a property's ability to generate sufficient Net Operating Income (NOI) to cover its annual mortgage debt payments.

Advanced15-18 min

Return on Assets

Return on Assets (ROA) is a financial ratio that indicates how profitable a company or investment property is in relation to its total assets. It measures management's efficiency in using assets to generate earnings, irrespective of financing structure.

Intermediate3 min

Total Assets

Total assets represent the sum of all economic resources owned by an individual or business, including cash, property, equipment, and investments, providing a snapshot of overall financial strength.

Beginner2-3 min

Leverage in Real Estate

Leverage in real estate refers to the use of borrowed capital, typically mortgage loans, to finance a property purchase, aiming to amplify potential investment returns on the equity invested.

Intermediate4-6 min

Loan-to-Value Ratio

The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the risk of a mortgage loan, calculated by dividing the loan amount by the property's appraised value, expressed as a percentage.

Intermediate14-15 min

Debt-to-Equity Ratio

The Debt-to-Equity (D/E) Ratio is a financial leverage metric that indicates the proportion of a company's or property's financing that comes from debt versus equity. It helps real estate investors assess the financial risk and solvency of an investment.

Intermediate5 min