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With our expertise as a hotel revenue management consulting company, we explain definitions, terminology and industry lingo in the hospitality investment industry.
Equity to Value Ratio or Equity Ratio
Equity to Value Ratio or Equity Ratio Calculation: Equity to Value Ratio = Total Property Equity / Total Property Value Ideal ratio: ratios below 0.5 are an indication of a heavily leveraged business What is the Definition & Importance of ´Loan to…
Average Mortgage Rate
Average Mortgage Rate: Calculation: Average Mortgage Rate = Sum of Mortgage Rates / Number of Mortgages What is the Definition & Importance of ´Average Mortgage Rate´: This KPI helps investors to evaluate if properties require refinancing….
Loan to Value Ratio (LTV)
Loan to Value Ratio (LTV) Calculation: LTV Ratio = Mortgage Amount / Appraised Property Value Ideal ratio: typically, 80% or lower LTV ratios will help you to obtain the most favorable / lowest rates What is the Definition & Importance of ´Loan to…
Average Rent Price Per Property: Calculation: Average Rent Price Per Property = Total Monthly Revenue / Total number of Properties What is the Definition & Importance of ´Average Rent Price Per Property´: As the name suggests, the KPI ‘Average…
Tenant Turnover
Tenant Turnover Calculation: Turnover Rate = (Number of Tenants Moved Out / Total Number of Tenants) * 100% What is the Definition & Importance of ´Tenant Turnover´: This real estate KPI informs you at what rate your tenants are leaving, and…
Payback Period Calculation: Initial Capital Cost for Project / Earnings from Project or Annual Savings What is the Definition & Importance of ´Payback Period´: Determining the actual payback period, otherwise known as break-even, is essential…
Operating Expense Ratio
Operating Expense Ratio Calculation: Operating Expense Ratio = ((Total Operating Expenses – Depreciation) / Gross Revenue) * 100% Ideal ratio: below 80% What’s the Definition & Importance of ´Operating Expense Ratio´: Using this KPI can help…
Return on Investment (ROI)
Return on Investment (ROI) Calculation: ROI = (Investment Revenue – Investment Cost) / (Investment Cost) or ROI = (Net Profit / Total Investment) * 100% What is the Definition & Importance of ´Return on Investment (ROI)´: Any time you´re making an…
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