Estate Living Magazine Estate Living Issue 29 May | Page 58

Common
real estate
formulas
you should
know
François Schoeman – CEO
Pecanwood Golf and Country Estate
We all struggle to save. Property, specifically a property you
can rent out, is a forced retirement plan. Buying a property is a
significant commitment that you are required to commit to and
maintain.
Property still seems
to be the best long-
term investment
one can make into
one’s retirement.
58 | www.estate-living.com
Property is probably also the single biggest investment an
individual will make. The asset, its return and the viability of
operating, leasing or growing your capital relies heavily on the
type of decisions made in the investment process. The real
estate market involves a lot of math, and understanding real
estate finance includes knowing a lot of formulas and ratios.
Sometimes it’s easy to forget or confuse them.
Here are three basic formulas to help you along your way.
Net operating income (NOI)
The starting blocks of the investment marathon is the operating
cost and possible net operating income (NOI). NOI measures
the ability of a property to produce an income stream from