Which numbers should I look at before investing in a deal?

Four numbers in a deal’s offering materials tell you most of the story: net operating income, cap rate, debt service coverage ratio, and cash-on-cash return. None of them is enough on its own, but together they show how the property earns money, what you are paying for that income, and how much room the deal has for things to go wrong.

Net operating income (NOI)

NOI is the property’s income after operating expenses: rent and other income, minus costs such as property taxes, insurance, management, and maintenance. It leaves out mortgage payments, capital expenditures, and depreciation, so it measures the property’s earning power regardless of how the deal is financed. The other three numbers are built on it.

Cap rate

The cap rate divides NOI by the property’s value. A property producing $80,000 of annual NOI on a $1,000,000 value has an 8% cap rate. Because it ignores financing, it lets you compare properties on a level playing field. In an offering, look at both the going-in cap rate and the projected exit cap rate — the exit assumption has a large effect on your projected return, so ask how realistic it is.

Debt service coverage ratio (DSCR)

DSCR divides NOI by the annual debt payments. A DSCR of 1.25 means the property earns 25% more than it needs to cover its debt, while 1.0 leaves no margin for vacancies or repairs. Many commercial lenders look for a minimum of roughly 1.20 to 1.25. A projected DSCR built on optimistic occupancy assumptions deserves extra scrutiny.

Cash-on-cash return

Cash-on-cash return divides annual pre-tax cash flow by the cash you invest, so it reflects the effect of leverage and estimates your yearly income yield. It does not capture appreciation, principal paydown, or tax benefits, so treat it as one input rather than the whole return.

Reading them together

Check whether projected returns are shown gross or net of fees, and remember that every projection rests on assumptions about rents, occupancy, and exit timing. Projections are not guarantees: real estate investments involve risk, including the possible loss of principal. For the longer-horizon metrics — IRR, equity multiple, and preferred return — see our crowdfunding investment metrics guide and the DSCR deep dive. For questions about a specific offering on Invown, visit support.